Employment Tribunals

RESERVED JUDGMENT Case No. 2423925/17 1 EMPLOYMENT TRIBUNALS Claimant: Mrs C Dakin Respondent: Evolving Edge Limited HELD AT: Manchester ON: 3 and 4 May 2018 27 July 2018 15 January 2019 BEFORE: Employment Judge Feeney REPRESENTATION: Claimant: Respondent: 3 and 4 May In person 27 July Mr G Mahmoud, Counsel Mr J Wingfield, Lay Representative JUDGMENT The judgment of the Tribunal is that the: 1. The claimant was not an employee within the meaning of the Employment Rights Act 1996. 2. The claimant was an employee for the purposes of Equality Act 2010 3. The claimant was a worker within the meaning of Employment Rights Act 1996 4. The claimant application to amend her claim (a) to include a claim of sex discrimination under the Equality Act 2010 (b) to add Sarah Brennan as a respondent succeeds RESERVED JUDGMENT Case No. 2423925/17 2 REASONS 1. The claimant brings claims of unfair dismissal, unlawful deduction of wages and maternity discrimination. A Preliminary Hearing/Case Management was held on 29 January 2018 by Judge Franey. He set out the issues in the case, in relation to the preliminary hearing was which was listed for 3 and 4 May. 2. The issues are as follows:- 2.1 Employment Status 2.1.1 Was the claimant employed under a contract of employment within Section 230(1) and (2) of the Employment Rights Act 1996, (ERA 1996) and therefore entitled to bring her unfair dismissal complaint. 2.1.2 If not, was the claimant employed under any contract meeting the requirements of Section 230(3)(b) of that Act and therefore a “worker” entitled to bring her complaint of unlawful deductions from pay. 2.1.3 If not working under a contract of employment was the claimant working under a contract personally to do work under Section 83(2)(a) of the Equality Act 2010 (Eqa 2010) and therefore entitled to bring her complaints of discriminatory treatment under that Act. 2.1.4 If the period was an employee what was the date upon which her period of continuous employment with the respondent began. 2.2 Amendment Application Can the claimant amend to include a claim of sex discrimination in relation to matters already pleaded which may fall outside the protected period? 3. The application was received by the Tribunal on 25 January 2018 included in the completed agenda for the preliminary hearing case management submitted by the claimant. 4. The allegations comprising the amendment in relation to sex discrimination. The sex discrimination is as follows:- 4.1 29 August 2016 SB amended the ways of working document by adding that the parties should “use contraception in the future”. 4.2 In November 2016 to January 2017 SB requested that the structure of the company be changed which had the effect of reducing C’s RESERVED JUDGMENT Case No. 2423925/17 3 remuneration substantially. The structure was changed to the substantial disadvantage of C, C was misled and manipulated. 4.3 On 3 July 2017 C was accused of not wanting to grow the business in getting pregnant. 4.4 July 2017 SB failed to enquire about C’s health, post-natal depression. 4.5 20 July 2017 hostile messages C is accused of not doing much work SB indicates that she wishes C to leave. SB states that she is not prepared to carry on like this, SB applied pressure on C to leave the business. 4.6 August and September 2017 SB refused to authorise a company accountant to apply for advance funding from HMRC following C’s second period of pregnancy related absence (due to post-natal depression). 4.7 July to October 2017 C is denied SMP payments. 4.8 August to October 2017 significant pressure placed on C to leave, R threatens to defame C and block C from undertaking additional work. 4.9 August to September 2019 SB removes C’s access to the invoicing system, transfers R’s monies into her personal account and makes demand from C for alleged overpayment. SB accused C of fraud and made numerous false allegations against her. 5. There was also an application to amend by adding Sarah Brennan as second respondent in relation to the Equality Act claims. This application was received on 18 January 2018. 6. It should be noted that the claimant’s existing claim is for (i) Unfair (constructive) dismissal, ordinary and automatic unfair dismissal due to pregnancy and maternity. (ii) Discrimination due to pregnancy and maternity under Section 18 of the Equality Act 2010 (iii) Unlawful deduction from wages. Pre-Amble 7. The claimant cannot proceed with the constructive unfair dismissal claim unless she has employment status under the Employment Rights Act 1996 (ERA 1996). Therefore, that has to be decided before she can proceed to her substantive claim. 8. Equally the claimant cannot proceed with her putative sex discrimination claim and/or maternity discrimination claim unless she has employee status under the RESERVED JUDGMENT Case No. 2423925/17 4 Equality Act 2010, the definition of employee for the purposes of the Equality Act 2010 is different from that in ERA 1996. 9. The second issue is whether the claimant should be allowed to amend, the claimant’s position is that most of the matters she relies on are already pleaded as maternity discrimination/ unfair dismissal but that as far as she relies on events falling outside the protected period these are to be pursued as sex discrimination and therefore an amendment is required. She states all the matters are already pleaded in her primary case. 10. Whilst this claim did begin on 3 May unfortunately the first day was spent entirely in reading and in applications and no evidence was started until 4 May. Accordingly, the matter was then re-listed for a further day on 27 July. Submissions were subsequently in writing. 11. An issue had arisen regarding without prejudice correspondence but at the hearing on 3 May the respondents withdrew their objection to the without prejudice correspondence stating that they did not mind it going in, what they objected to was the claimant using it when they could not, but now that it had been clarified that both parties agreed without prejudice correspondence could be relied on the respondent withdrawing their objection. Accordingly, I understood that the issue of “without prejudice” correspondence had fallen away. As it transpired the issue was raised again but having taken the view that the matter had been agreed I have made no adjudication on it. Witnesses 12. For the claimant the claimant herself, Mr Johnathan Dakin, husband and Donna Neely, marketing consultant. Their evidence was accepted but they were not cross examined by the respondent. For the respondent Mrs Sarah Brennan,(SB) Director and Mr Robert Brennan, (SB) Accountant, husband of Sarah Brennan. There was an agreed bundle. 13. I have referred to businesses by initials or a generic description as their specific identity is not required. I have referred to the respondent’s accountant as AL, he is referred to by the protagonists as Andrew at times. He was not a witness. 14. I have endeavoured to make findings relevant to the issues I have to decide and not in relation to the substantive case. Tribunal’s Findings of Facts 15. The claimant and Mrs Sarah Brennan were friends since September 2010 following SB being interviewed by the claimant for a role at Bruntwood (the claimant’s then place of work). They worked together in promoting women in leadership and working mothers’ issues. 16. The claimant and Mrs Brennan worked together at Bruntwood until April 2014 when Mrs Brennan went on maternity leave and the claimant left for full time employment at Swinton Insurance. Both individuals work in human resources and training. The claimant is a Godmother to Mrs Brennan’s daughter. Whilst Mrs RESERVED JUDGMENT Case No. 2423925/17 5 Brennan was on maternity leave she and the claimant discussed setting up a business together. In April 2015 they decided to set the wheels in motion by setting up a company on paper on 8 April 2015. Each was a 50% shareholder and both were directors. Neither of them were intending to leave their jobs immediately as the claimant had only been at Swinton for twelve months and Mrs Brennan was on maternity leave. 17. SB intended to look after her daughter 2 days a week at home following her maternity leave. 2015 18. The claimant stated that she was working for the respondent from March 2015 but there was nothing specific from March she relied on. The claimant mentioned reclaiming mileage from October 2015, emailing content of a leadership scheme to SB in July discussing providing work to OG in May 2015. 19. In April a website domain was obtained and the claimant’s friend Donna Neely was engaged to look at marketing for the business, in May there were negotiations to design a logo with a graphic designer and some stationary was bought. There was no employment contract. 20. In July a phoneline was purchased. In September and October more email addresses and phone lines were purchased. SB was paid for a hotel overnight stay. Between August and December Ms Neeley taught the claimant to use a design system called Canva which enabled her to design training materials in house. Insurance was obtained in August 2015. Website domains were bought in August too. AL was engaged as the company accountant from 21st September 2015. 21. In May there were discussions with a client about potential work delivering training. This was delivered in August, October and November 2015 the in February 2016. The claimant used her holiday to deliver the sessions before she left her employment on 13 November 2015. The money received for this work went to RB as the respondent did not yet have a bank account, it was used for set up expenses. SB argued it was not ‘work’ but to generate money for business expenses, and that they were keeping the company secret at that point. In fact at times savings had to be used to cover business expenses as no ‘earnt’ money was available. A payment was made to SB and RB to cover expenses in August 2015. 22. In April 2016 In reply to a government questionnaire SB recorded that the business commenced trading on 14 September 2015. 23. The business’s purpose was to design and deliver training to schools and businesses, particularly in the areas of leadership and team development and also offering one to one coaching (although that was intended to be offered by Sarah Brennan only) , the only individuals referred to on the Evolving Edge website were the claimant and Sarah Brennan (SB). RESERVED JUDGMENT Case No. 2423925/17 6 24. The business was set up with very little agreement and in fact business overheads were initially covered from savings, the claimant and SB had equal rights over the bank account and only a single signature was required they had identical credit and debit cards, there was no shareholders agreement, no contract of employment and no pension or health provisions, no sick pay and no company policies or procedures, there were no job descriptions or holiday allowances. The claimant contended they agreed 30 days holiday but there was no such agreement documented or referred to in the many What’s App messages the claimant exchanged with SB. I prefer SB’s evidence that the only requirement was to tell the other when they intended going on holiday. If either party was unhappy as was considered later the company would have to be wound up /dissolved. 25. In the second half of 2015 each of them obtained an opportunity to provide training as a dry run for launching their business, SB by doing some work for a friend of her husband and taking holidays to do so. Mrs Dakin got a day’s experience with her sister in law but was unable to do the work herself and arranged for a trainer to do it. The claimant’s husband also managed to secure two days training at his place of work at the end of 2015 in order that they could test out materials on his colleagues. 26. Other training was delivered in 2015 for OG . This took place on 11th August, 21st October and 25th November 2015 then in February 2016. The claimant agreed that the payment for these training sessions were used to finance the businesses set up costs. 27. Training for a local Council was delivered on 2 November and 14 December and invoiced at £2160. Training was delivered for TFGM on 14th September and this was invoiced on 18th November for £1216. However, an outside trainer was used for this as it required specialist knowledge but the respondent received the payment. 2016 28. In the week commencing 25 January 2016 the claimant delivered some training work for another company for which payment was made to the Respondent but the claimant received all the money. (PU) It had been agreed that everything would be split 50/50 as at the time the business was set up it was anticipated they would bring the same amount of work and the cost of setting up would be split equally. However, the claimant took all the income from that work on the basis that Evolving Edge had not actually yet been launched. SB referenced this work with PU in 2016 which was undertaken by C without recourse to the respondent to support the contention the claimant was not a worker. The evidence from the claimant was that this was invoiced by the respondent and paid into the respondent’s bank account and the respondent paid C for this work because at the time SB was still working at Bruntwood and receiving a full salary, and C was not. I accept the claimant’s evidence on this point. In addition she agreed she also undertook work later for the MC foundation, a charity,for which she received £250 accounted for to the business but a further £250 as a ‘gift’. RESERVED JUDGMENT Case No. 2423925/17 7 29. Mrs Brennan left Bruntwood in February 2016 and her evidence was that launched their website and business that month. The formal business launch was arranged at Burnley Football Club on 26 February where they ran a taster of the work to be offered. The claimant disputes this and says this was just a resilience training taster session. 30. Work undertaken from February to July 2016 was split 50/50. 31. The protagonists had a difference of opinion around March when the claimant was promoting open courses as opposed to bespoke courses for individual businesses as SB felt this was difficult to market when their brand had not built up however the claimant proceeded with this idea. They tried the open courses and made a loss. There was also a disagreement about the address to be used on mailings as the claimant did not wish to have an Alderley Edge address on as she was seeking business opportunities around Burnley and Lancashire and felt this would be off-putting. SB on the other hand was developing contacts around Cheshire where this would not make any difference. In fact, the claimant had gone ahead using the Burnley address without informing the claimant. SB felt that by April 2016 they were going under different directions under the Evolving Edge umbrella with the claimant wanting to pursue work in primary schools and SB in businesses and they agreed that they would focus on doing work in the areas they wanted. The claimant also applied for a mentor scheme without first agreeing this with SB and with the intention the mentor would be just for herself although SB did in fact join in on some of the sessions but only with the claimant’s agreement. 32. At the time SB’s husband was working as an unpaid book keeper. To assist in organising invoicing SB got a free trial of Quickbooks, the claimant arranged access to it for her father in law without consulting SB 33. On 26th April 2016 the company accountant advised “as soon as you think there is sufficient cash in the business to start taking a salary then I can get the company set up for payroll. Because there are two employees you will be able to take advantage of the Employment allowance which means you don’t have to pay employer’s NI on your salary. This means that your target salary is £11k” (i.e. the equivalent of the personal tax allowance.) 34. in June 2016 SB raised concerns with the claimant about spending £300 on refreshments for a free taster event in Burnley when there was no money in the business, (the claimant relied on this incident as showing she had little control of the business) There was a falling out about this for a number of days and as a result the claimant said she felt like quitting the business, they agreed they had different views on how the business should be run and the claimant said she would keep going for three months and then review how she felt. She said she needed to earn as she had frozen her mortgage but that was only a temporary arrangement. 35. SB secured some work in New York in July 2016 and they both travelled there to deliver it. At the time SB was doing coaching work which the claimant could not deliver but but the claimant was still receiving half the payment for this work even though she didn’t do it herself. 36. In August 2016 the claimant advised SB that she was pregnant. RESERVED JUDGMENT Case No. 2423925/17 8 37. Around this time the claimant had produced a ‘Ways of working’ document which she relied on as showing they had in effect job descriptions (the claimant relied on this to show she was under the control of the respondent). SB says that the claimant produced this document ‘off her own bat’, that it was not in the nature of agreed job descriptions but contained some principles which would underpin the business and it was for discussion. SB agreed they had jointly created the content but reiterated that it had not been her idea to do so but the claimant’s. The document was a sheet of A4 with headings such as confidentiality, accountability, commitment to trying ideas etc. the most practical and specific point was stick to weekly meetings, update to do list, share important information. I agree with SB’s description of this document it was very general, it was clearly not complete, it did not contain any ‘instructions’ 38. There were also from time to time ‘to do’ lists with individual’s name put against specific tasks including SB’s husband RB. 39. By this stage SB felt she was doing far more of the work as much of it was coaching and yet the claimant was still receiving 50% payment. 40. On 31 August RB emailed to say ‘we need to decide on a monthly salary for both of you until 31 March 2017”. 41. Payroll was set up in September 2016. Until this point all payments to the claimant and SB had been via dividends and expenses. It was agreed in September that that the claimant and SB would receive a monthly salary equivalent to the personal tax allowance if possible the respondent says it is common practice to do this in business to utilise personal tax allowances. The claimant contends it is fraud if she is not an employee;that is not for me to decide here. On 4 September it was agreed that they would be paid £2000 a month until the end of the tax year to utilise the personal allowance. 42. In fact, the claimant received the following payments throughout her time with the respondent: 26 August 2015 £ 195.00 17 November 2015 £ 555.00 2 February 2016 £ 60.00 7 March 2016 £1,068.00 8 April 2016 £1,000.00 20 June 2016 £1,250.00 29 June 2016 £ 534.00 8 August 2016 £2,500.00 26 August 2016 £ 35.00 RESERVED JUDGMENT Case No. 2423925/17 9 5 September 2016 £2,700.26 30 September 2016 £2,000.00 27 October 2016 £1,000.00 30 November 2016 £1,000.00 30 January 2017 £ 68.59 1 February 2017 £ 684.00 22 February 2017 £1,730.00 22 February 2017 £ 178.20 28 February 2017 £1,416.00 27 March 2017 £1,644.00 28 March 2017 £1,416.00 2 May 2017 £ 13.84 2 May 2017 £ 924.64 2 May 2017 £ 921.15 2 May 2017 £2,077.00 31 May 2017 £2,447.00 31 May 2017 £ 924.64 3 July 2017 £ 924.64 5 July 2017 £ 256.42 5 July 2017 £2,332.00 31 July 2017 £ 924.64 7 August 2017 £1,226.00 9 August 2017 £ 151.20 43. I find prior to September the claimant and SB were paid a mixture of expenses and dividends. I note that at no time during the hearing or in submissions did either party refer to any director’s loan agreements. In cross examination it is of note that SB agreed the intention was to pay themselves a regular salary at some point. On 24 November SB and the claimant met to discuss changing the payment arrangements to make them more fair. The accounts highlighted that SB was RESERVED JUDGMENT Case No. 2423925/17 10 bringing in the majority of the work and delivering it but the claimant taking 50% which SB could not afford to continue in that way. SB said that the claimant agreed this was a situation and therefore the initial suggestion was from the claimant that if one them brought in the client, delivered the work they should get 100% of the profit, SB had suggested 95%. So that the other director, likely to the claimant would get 5% whatever the situation. There was then discussion about having a partnership agreement drawn up setting out how the money would be split, there was a meeting on 14 December at SB’s house and it was suggested that shares should be issued. 44. SB also agreed some work she had brought in before this agreement could still be split 50/50. 45. The issue of SMP for the claimant arose at the end of 2016. The accountant wrote to the claimant and SB copied to RB on 29th December stating “ I’ve attached a maternity Pay calculator for Caroline and the various assumptions about due date etc shown at the bottom – if those are wrong please let me know and I’ll update the calculator. The 8-week period we discussed has already passed …”. He added I have attached details of the process to request advance payment of SMP from HMRC …” Again, the claimant relied on this to show she was an employee and pointed out that SB raised no objection to it. SB says that she relied on the accountant’s professional advice that the claimant was entitled to the payments and was simply copied into the correspondence, she was not agreeing with any proposition that the claimant was an employee by reading the email. On 1st February 2017 there was a further exchange, this time SB was just copied in, wherein the claimant stated she would like to start her maternity leave from 6th March and the accountant advised what information he needed from her. SB pointed out that at no time was a MATB1 form provided to her or was put on file with the company. Further it was the claimant who arranged for the money to be paid upfront to the company so that the money could then be passed on to her. 2017 46. At the end of January, the claimant undertook work for a charity to which LS, another consultant the claimant knew, was connected. She said it was billable,i.e. the respondent could bill it although it was only £500 as it was for a charity - the MC foundation. It is correct that SB did not know about this in detail but there was no disagreement about the claimant doing it at the time. 47. On 22nd January there was an email from RB summarised the situation going towards the year end, discussing paying expenses and how much money would be needed for ongoing expenses etc. The claimant pointed to this as an example of how little control she had over the business but I do not accept this it was explanatory, it had some suggestions which could have been queried. Likewise, RB’s ongoing emails regarding payments, in one he advises the claimant as to the benefits and disadvantages of taking amounts as salary or dividends in relation to her student loan vis a vis paying corporation tax. 48. On 25 January the claimant asked SB to check what their profit share arrangement was and SB said she thought from memory it was 95% split for work RESERVED JUDGMENT Case No. 2423925/17 11 brought in by one of them and solely delivered by that person and reminded the claimant that she had proposed 100%. She was happy to stick to 95/5 if she wished to but thought 100% would be easier as the calculations were onerous for the small amounts at issue. I have not made a finding on the eventual outcome of this as it is one of the claimant’s discrimination claims. 49. At the end of February 2017 JDX, a major client offered the business more work and SB suggested that the claimant got involved in it on her return from maternity leave but she would begin by doing it herself. The claimant then went on maternity leave in March 2017. 50. The claimant received SMP from 6 March to 7 May 2017. The claimant placed some reliance on this and argued that SB had agreed it. (It later transpired that C was not entitled to SMP although she would have been entitled to maternity allowance.) SB says that she was just copied into the email exchange about SMP with the accountant and didn’t engage with it although she did comment that the fact they had paid themselves a salary in what she believed was the relevant period meant her SMP payment would also be a reasonable amount – SB referred to this as lucky. The claimant points out SBs name and contact details are on the SMP form. I find that SB was a bystander to this process which took place between the claimant and the accountant. I note that the claimant decided on her period of maternity leave with no discussion or interference from SB. 51. This form also said that the business began on 8th April 2015. 52. On 28 March which was nine days after her baby was born the claimant contacted SB and said she wanted to do the training in April with SB, SB was shocked as it was so soon after the birth but in the end the claimant did come along and deliver some of the JDX training. Due to the JDX work it was possible to take a salary between April and September. 53. On 7 April 2017 RB emailed the accountant to ask what monthly salary he recommended as they had obtained regular work through an 11 month contract with a major client “given that there will be enough money each month over the year to pay each of them the £11k we aimed for last year” the accountant AL replied that £958 a month worked out best from a tax and NI perspective. RB replied “that’s great please assume those salaries for the whole year then with C’s SMP taken into account (so I’ll make up to 958 with salary and the rest as dividend for her monthly amount this month). “Therefore, the intention now that there appeared to be sufficient money coming into the business was to pay a basic £958 as salary then any actual profit remaining to be distributed after expenses as dividends. The £958 therefore had no relationship with actual amounts earnt and did not relate to work undertaken. 54. In cross examination SB stated that it had always been their intention to pay themselves a salary however there was no evidence that it was ever going to be more than the personal allowance. RESERVED JUDGMENT Case No. 2423925/17 12 55. The claimant in June 2017 applied for an Entrepreneurial Spark Growth Programme without telling SB only mentioning it once an application deadline had passed. SB referred to this as it showed how the claimant on this occasion and on others acted independently. The claimant also advised SB that she wanted to do things more collaboratively and plan more which had fallen by the wayside as SB and the claimant had not been agreeing regarding how to develop the business and what type of work to undertake. The claimant said if that couldn’t happen she would consider leaving the business. The claimant also recommended a number of people who would be able to help SB undertaking work if she did leave the business. 56. The claimant also obtained some work with FCM in June 2017 which was undertaken by LS. The text messages between the claimant and SB shows this was agreed as she says ‘yep get her booked’. 57. The claimant received a P60 for the tax year 2016/7 recording an overall salary of £7516. 58. The claimant gave evidence as recounted above as to what she actually received from 25th August 2015 to 9th August 2017. These amounts varied widely. After the agreement the claimant received less than the proposed basic salary of £958 on five occasions although only by £34 on three of those occasions. 59. On 2 July the claimant had referred to an exit strategy and that she wouldn’t let SB down in relation to existing work and the claimant’s final message in this chain was “I wouldn’t feel right leaving and not saying how I feel, at least we tried more than most people would do, I feel much clearer today as all going to be ok, I’ll work out what we have left to do jointly and send it over to you”. There were then discussions about how the claimant would leave, for example, did she need to sign an agreement stating she wouldn’t approach Evolving Edge clients for future work.? 60. On 3 July 2017 the claimant also offered to pay the claimant’s husband £100 per month for the accounts which he had been doing for free up until then. She made two payments before the relationship broke down. 61. On 7 July the claimant said ‘I am trying to pick up extra bits to do on my own (associate stuff)’. 62. On 20 July the claimant suggested partnering up with other associates to deliver training. of us – that how we have grown the brand and what we agreed to do as a business” . SB sent a message (via WhatsApp) to the claimant in reply , saying: “I’m sorry but if you think it’s ok to run a business where I do work under EE and that only in the way we always agreed I would (coaching etc) and grow the brand that you go off and collaborate with other partners in a completely separate way, adding nothing to the EE brand and working a way we never agreed, in fact outright agreed we wouldn’t do, then we need to wrap up EE as soon as possible unless you can buy me out. On so many levels that just can’t possibly work. Isn’t what we agreed when we set the business up and isn’t something I can be part of. I can’t work in partnership with someone who tells me they want to leave then makes decisions on the operations on the RESERVED JUDGMENT Case No. 2423925/17 13 business and partnering with other people without even mentioning it to me, and simply says they have the right to change their mind when I’m uncomfortable with that.” 63. On 20th the claimant had said “ I want to work with you corroboratively as I felt out on a limb … I spoke to you about it and we agreed we talked about exiting, you then said we needed to carry on with existing work and I agreed, I can’t just do that work until January/February so I looked for other stuff that I can do on my own, I then realised that maybe doing separate work won’t be too bad as I can work with other people like me, Donna, Louise, Naja etc so I am feeling in a much better place now, plus I have worked really hard like you so try to create a plan B that didn’t involve throwing it all away, I don’t want you to feel stressed … we work brilliant together …”. 64. On 20th July SB had also said “we’ll just need to make sure you do your formal resignation addressed to the company before you take on any associate work”. Therefore, there was no expectation that the claimant would do this work whilst still part of the respondent business 65. Another issue arose in July 2017 relevant to these issues. The claimant tendered for work with GM growth hub for 121 leadership training. She included SB’s name on this as she did not want to be accused of ‘doing her own thing’ and said she discussed it with SB on 2nd August. But SB was annoyed later as she said she knew nothing about it. The tender also included 2 individuals who could help with the work if the tender was successful. 66. Meanwhile on 2 August when the claimant returned from holiday SB and she met and SB suggested that either the company be wound up or SB bought the claimant’s shares. The claimant stated she would prefer SB to buy her shares and have the option to work as an Associate for SB in the future. The claimant had just won some work and she wanted to retain it, which she could do under this arrangement. In this meeting SB said that they agreed the company was virtually worthless and the majority of the work and clients were SB’s but SB was still prepared to pay her something for it. 67. No further communication was received regarding how much the claimant wanted for her shares so SB emailed her asking about it on 8 August and on 9 August she replied saying she would sell them for £35,000. SB felt this was a ridiculous amount but responded offering to sell her shares to the claimant for £25,000. The claimant then seemed to appear to change her mind about exiting the business and stated, “following the changes we made to the business in December 2016 I believe we now have a workable arrangement that can continue in the short term”. This was a reference to the profit share agreement of December 2016. 68. SB was planning to do a piece of work on the 16 August, originally to be delivered with the claimant but due to the breakdown of their relationship on 10 August she emailed the claimant and suggested that it would be inappropriate to deliver the session together and in any event that the claimant wasn’t qualified to deliver it as it involved using Psychometric Testing which she was not certified to use. The claimant however replied saying even if she did not take part she still wanted paying for the session whether she delivered it or not. SB wrote again saying that in the line with their agreement she wasn’t obliged to pay her for work RESERVED JUDGMENT Case No. 2423925/17 14 she delivered by herself and it was the same if the claimant delivered work by herself. In fact, the claimant had received an advance payment for this work which she ought to have on that basis have returned but never did so. 69. On 12 August 2017 SB stated: “One client that I do not currently provide a service to but that I will be contacting is GM Growth Hub. When you tendered for this work you not only included my name in the tender without even telling me that you were tendering, you also indicated the type of work that I would do. You have used my qualifications and experience to win work that I knew nothing about and I certainly won’t be tied into work that I did not agree to. If that wasn’t bad enough you also added two people to the tender that I have never even met. Again, you didn’t even tell me what you were doing. As far as I am concerned your actions were completely unacceptable and not those of a responsible director. In the absence of an agreement about the future of Evolving Edge I will writing to that client to inform them that I was put forward for that work with absolutely no knowledge of the fact that I had been, and will therefore not be involved in its delivery.” 70. There was further discussion with the claimant’s husband on 16 August about the future of the business to which SB replied saying “a genuine attempt to resolve matters was encouraging but large amounts of money were not on the table to pay for the claimant’s shares”. 71. On 17 August Mr Dakin requested that the company be wound up, he said “I have spoken to Caroline and we want to wind the company up straightaway, you can then both arrange to work with your existing clients in separate businesses. As it is not my company can you make the necessary arrangements for the winding up of the company, I’ll make sure any necessary paperwork is completed from this end”. SB contacted the claimant to ensure she agreed with this and the claimant confirmed this on 18 August. 72. In this email Mr Dakin said “you have said that winding up the company is likely to take longer than envisaged, this brings up the question around Caroline’s income during this period, Caroline was signed off sick by her GP on 14 August so I have been making enquiries into what she is entitled to, as she is off sick following the 39 weeks following the birth of a child the procedure is for statutory maternity pay to be awarded from the business instead of statutory sick pay, when it gets to the relevant stage of the winding up process Andrew will need to provide a form which enables Caroline to claim maternity allowance from the DWP should she wish to do so. I’ll be contacting Andrew independently in respect of the statutory maternity pay as he will need to see the sick note and as it is unlikely that he has dealt with this situation before he will probably need me to provide the HMRC guidance notice, have you already made him aware of the situation in respect of the winding up of the company”. 73. Mr Dakin also suggested that salary was paid as normal and accounts finalised as part of the winding up process, he believed there was sufficient cash in the business to do this however SB was concerned as the business might have other liabilities that needed to be paid first. Mr Dakin also said the claimant should be paid RESERVED JUDGMENT Case No. 2423925/17 15 for sick leave and that he should sign off RBs accounts before they were sent to AL as the claimant was too ill to be contacted directly. 74. SB replied on 22 August asking for the claimant’s sick note as she was not aware that she was “off sick”, she also pointed out that the claimant had deleted her from the shared Microsoft Office account and the business Canva account details so she could no longer access these. They were paid for by the business and property of SB’s was stored in the Canberra account which she needed access to and she felt this was stopping her carrying out her normal course of business”. She said it was not acceptable behaviour from a director of the company and there would be financial consequences for SB if her access was not. She went on to say “as I have already explained there is no contractual obligation for me to provide Caroline with work from my clients, she wasn’t needed at JDX and will not be paid, she would not have been able to do it anyway as according to you the doctor signed her off sick two days before, as far as I am concerned that is the end of the matter, there is nothing to resolve and Rob’s calculations remain correct, again his figures are correct regarding the percentages Caroline was only involved in 45% of the work, she did not deliver in August which you have appear to have included so she owes the business £403.20 overpayment plus £160 to cover overheads”. 75. Regarding the proposal to pay salaries she went on to say “although it may appear Evolving Edge has a cash surplus this is all allocated to the payment of various taxes and invoices which I have now ringfenced in order to protect both mine and Caroline’s tax and VAT provisions, Andrew has been informed of what I have done and why, I have done this because you have made it clear that she is unable to deal with these matters and I don’t trust you having access to that money through her as you appear to view the balance in the account as money to be dipped in to with no regard to other commitments, there is actually an overall deficit of around £5k when the VAT due in September and corporation tax are included which future invoices that are due in will just about cover, there is nothing left for salaries and as a matter of interest I will not be paid a salary in August either, I have however left £150 in the account to cover direct debits until the end of the month and I will transfer across monies for future direct debits as and when they are needed”. 76. SB did remove the majority of money into a private account in order she says to protect it from Mr Dakin. She informed the accountant of what she had done and why and would move money back into the account to ensure that all direct debits and standing orders were covered as and when required. 77. On or around 23 August SB discovered that the claimant had frozen the business bank account. 78. At the beginning of September SB managed to have the account unfrozen. 79. On 9 September the claimant rejected ways forward but did not suggest what she wanted to happen. SB gave evidence that she now believes that the claimant was stalling to get through to January, in order that she would have accumulated two years’ service to bring an unfair dismissal claim. During a holiday in September SB discovered that Mrs Dakin had locked her out of one of her own email accounts using SB’s own login details. She regained access but then found that the claimant had done this again, there was then communication between SB and the claimant RESERVED JUDGMENT Case No. 2423925/17 16 regarding settling the situation and offers regarding the amount to be paid for the shares. 80. On 26 September the claimant attended a meeting at Blackburn College to discuss work to be delivered in March 2018 and discovered that SB had rung them already and said that the EE logo should not be used on any materials and that they could choose whether C or SB did the work but both of them would not be doing it. The respondent in submissions stated that the claimant had undertaken work fro Donna Neely in September but whilst her solicitor did later indicate she had invoices to submit for work done there was no specific reference to Ms Neely and the claimant was not asked about this accordingly I can make no finding that such work was done. There was nothing to stop the claimant undertaking work under the respondent’s banner and keeping 100% of the monies paid but she had to account to the respondent for it first and await its disbursement by the accountant as ofcourse there may be expenses which the respondent needed to pay to which she was obliged to contribute. . 81. On the 6 October it is relevant to note that the claimant’s solicitor indicated the claimant had invoices to pay into the business. 82. On 17 October 2017 there appeared to be an agreement. By this stage SB had a new business opportunity and was stating that she intended to resign as the offer which had appeared to be agreed was now stalling. 83. On 30 October the claimant resigned, new directors were then appointed to close down the company and SB also resigned. SB’s father took on one of these directorships and wrote to the claimant on 5 November asking her if she had any outstanding invoices which needed paying and requesting she return company assets, also as to whether she wanted future communications sent directly to her or her solicitor, again on 18 November he was anxious to obtain the printer which belonged to the company. 84. On 29 November the claimant began the process of bringing a Tribunal claim. Subsequently the claimant’s solicitor stopped acting for her and because Mr Wingfield had been advised not to contact the claimant directly but only through a solicitor, he was then unable to contact her. 85. The claimant stated that the company had no assets, certainly no cash in hand and therefore it was unlikely any award would be paid 86. The claimant approached ACAS on 31st October under the early conciliation process and her certificate was discharged on 2nd November. The certificate was in the name of this respondent. The claimant issued proceedings on 22 November 2017 and at box 2.1 named SB. As has been noted before this box is confusing as it asks who is the person or organisation you are claiming against. It was accepted on the grounds that the difference was a minor error i.e. the reference to SB on the claim form, and ordered to be served on this respondent. On 18 January the claimant emailed the tribunal to point out she had wished to also issue a claim against SB. She enclosed an additional ACAS certificate naming SB applied for on 17 January and discharged on 18 January 2018. As the primary time limit was 29 January she believed she was in time. She did not issue a new claim form. RESERVED JUDGMENT Case No. 2423925/17 17 The Law Employment Status Employment Rights Act 1996 87. Section 230 of the Employment Rights Act 1996 defines an employee as follows:- “in this Act “employee” means an individual who has entered into or works under (or where the employment has ceased worked under) a contract of employment. In this Act a contract of employment means a contract of service or apprenticeship, whether express or implied, and if it is express whether oral or in writing. In this Act, worker means an individual who has entered into or works under or (or where the employment has ceased worked under) – (a) A contract of employment; or (b) Any other contract, whether express or implied and if it is express whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any professional business undertaking carried on by the individual”. 88. In Ready Mix Concrete 1968 three questions were set out to be answered in defining a contract of employment. 88.1 Did the worker undertake to provide his own work and skill in return for remuneration; 88.2 Was there a sufficient degree of control to enable the worker fairly to be called an employee; 88.3 Were there any other factors inconsistent with the existence of a contract of employment. 89. In Cotswold Development Construction Limited -v- Williams 2006 it was suggested there should be a four-fold approach. (i) Was there one contract or a succession of shorter ones; (ii) If one contract did the claimant agree to undertake some minimum amount of work for the company in return for pay; (iii) If so, was there sufficient degree of control to make it a contract of employment; RESERVED JUDGMENT Case No. 2423925/17 18 (iv) If there was insufficient control or other factors negating employment was the claimant nevertheless obliged to do some minimal work or a reasonable amount of work personally thus qualifying him as a worker. 90. The right to control rather than day to day control is what is required, White and Todd -v- Trentback SA 2013 EAT. A case which specifically addressed the situation of a director also claiming to be an employee, Secretary of State for Business and Enterprise and Regulatory Reform -v- Neufeld and Howe 2009 Court of Appeal which established that it is possible for a director who owns all the shares in the company or is the sole director to also be an employee. It was said that “it is no answer to the claim creation of such a contract that the controlled condition essential to it is not satisfied, the answer to that point even in relation to a one-man company case is that the company and the one man are not the same person, in Lee’s case the employer was the company and the employee was Mr Lee. The control necessary for the purpose of the claim contract of service was exercisable by the company and it made no different that in practice so long as Mr Lee remained the sole governing director that the control would be and was exercised by him as the company’s agent. 91. In the Secretary of State for Trade and Industry -v- Bottrill 1999 the EAT said the shareholding of the person in a company by which he alleges he was employed is a factor to be taken into account because it might tend to establish either that the company was a mere simulacrum or that the contract under scrutiny was a sham. The court said “ In our judgment it would be wrong to say that a controlling shareholder who as such ultimately had power to prevent his own dismissal by voting his shares to replace the board was outside the class of persons given rights under the Act of 1996 on an insolvency.” 92. In Newfeld the issue of salary was also addressed and it was argued it was not a determining matter that salary was not always received, if in fact it was established that the individual was contractually entitled to it, it was said that the fact that the person did not take the salary could not retrospectively diminish the right to the salary. 93. In Euro Panel Processing Co Limited -v- Nimo EAT 91 a company manager did not draw a salary for ten months despite working full time, the EAT held that the other advantage that he enjoyed, payment of expenses, pension contributions, use of the company car was sufficient to preserve the employment relationship during the ten month period. 94. Also, an individual may choose not to exercise their right to draw a salary, this does not automatically lead to the conclusion that they are not an employee, SOS for Business, Innovation and Skills -v- Knight 2014 EAT. Neither, does the failure to agree a salary or wages indicate a contract of employment is yet to be formed. Stack -v- Ajar-Tech Limited 2015 Tribunal. It was found there was an express agreement, the claimant would work for the respondent with an implied term that he would be paid a reasonable amount for his services and hence he was an employee. This was upheld eventually by the Court of Appeal. RESERVED JUDGMENT Case No. 2423925/17 19 95. The respondents relied on the case of Dugdale -v- DDE Law Limited EAT 2017, which concerned a claimant and two others incorporated the respondent company as a solicitors practice and worked in it as solicitors from 2008 to 2014 the claimant like his fellow directors did not enter into any express contract of employment, written or oral, with the respondent and received payment by loans later repaid from dividends on her shares with a small notional payment of salary equivalent to the personal tax allowance, the Employment Judge commented that the directors acted like partners would have done in a traditional partnership and held that the claimant was not an employee of the respondent during this period. That case differed in that although payment was received as salary up to the tax threshold as here above that payments were received as loans which were paid back from dividends, and there were difference in control as the claimant was a minority shareholder as there were three shareholders. The EAT said that permissible conclusion had been reached. Employee under the Equality Act 2010 96. Section 83(2)(a) of the Equality Act 2010 states that:- (2) Employment means:- (a) Employment of a contract of employment a contract of apprenticeship or a contract personally to do work; the definition therefore is broader of an employee under the Equality Act in particular in relation to the third category a contract personally to do work. 97. The number of cases in relation to contract personally to do work actually arise under unlawful deductions legislation and whistleblowing provisions 98. The original leading case under what was then the Sex Discrimination Act is Mirror Group Newspaper Limited -v- Gunning Court of Appeal 1986. Mrs Gunning applied to take over her father’s “agency contract” for distribution of Sunday newspapers, she was refused on the basis of her having family commitments, however it was found that her work did not come within the definition of employment as it was not a contract personally to execute any work or labour, and the execution of such personal work or labour must be the dominant post of the contract, in this case she just needed to organise distribution, she did not have to do it. The dominant purpose test has been questioned in a number of cases and the Supreme Court said that the dominant purpose was relevant but was not exclusively determinative, that was in Gavraj -v- Haswani 2011 SC. The fact that an individual does not perform all of the work personally does not necessary mean the dominant purpose test will not be met, so long as the contracting party performs the essential part of the work, some of it can be delegated. It can be an implied obligation, it does not have to be express, as being a significant amount of case law about the right to substitute and whether this undermines the dominant purpose being to carry out the work personally. The right to provide a replacement must be limited in some way if it is not to prevent the worker for claiming protection under discrimination legislation. Usually it is the case that the replacement must be suitable, or that the approval of the other party to the proposed replacement must be sought. However, a blanket right to provide a substitute is unlikely to meet the requirement of personal service, RESERVED JUDGMENT Case No. 2423925/17 20 however, it was also shown that that substitution clause is not a sham and that it is genuine clause see Auto Clenz Limited -v- Belcher 2011 SC. Worker under 1996 Act 99. Section 233B of the Employment Rights Act 1996 is the same test as section 83 of the Equality Act 2010, substantially. It requires the tribunal to distinguish between a situation where an individual is not an employee but neither are they truly self employed by being in business on their own account. 100. The Supreme Court in Bates van Winklehof v Clyde & Co LLP [2014] SC stated: “Generally there are three tests to establish if a person is a worker or self-employed: (a) Is there an express or implied contract to perform work or services? (b) Is there an express or implied obligation to perform the work or services personally? (c) Is the worker performing the work or services in the context of running a business where the other party is a client or customer?” 101. In Byrne Brothers (Formwork) Ltd v Baird [2002] EAT it was held the intention was clearly to create an intermediate class of protected worker made up from individuals who were not employees but equally were not carrying on a business in their own name. 102. In the recent cases of Uber v Aslam [2017] EAT and Pimlico Plumbers Limited v Smith [2018] the main test remains the obligation of personal performance: the obligation “personally to do the work” may be an implied one (Manku v British School of Motoring Limited [1982] ET). However, the fact that the individual does not actually perform all of the work personally will not necessarily mean that the contract is not a contract personally to do work. So long as the contracting party performs the essential part of the work he or she is free to assign or delegate other aspects to another person. For example, a solicitor may delegate some of the legal work in a case to an assistant and rely on a secretary to carry out ancillary tasks like typing and posting letters and other documents (Kelly & Anor v Northern Ireland Housing Executive [1998]). Law on Amendments 103. Guidance as to whether or not to allow an application to amend is given in the case of Selkent Bus Company -v- Moore 1996 EAT, the overarching principle was stated by Mummery J to be “whenever the discretion to grant an amendment is invoked the Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.” 104. Mummery J went on to set out a non-exhaustive list of factors relevant to the exercise of discretion. RESERVED JUDGMENT Case No. 2423925/17 21 A. The nature of the amendment; B. The applicability of time limits; C. The timing and manner of the application. 105. It was stressed however that the paramount consideration remains that of comparative disadvantage, the Tribunal must balance the disadvantage to the claimant caused by refusing the amendment against the disadvantage to the respondent caused by allowing it. In respect of the nature of the amendment it was said in Selkent “applications to amend are many different kinds ranging on the one hand from the correction of clerical and typing errors to addition of factual details to existing claims and the additional substitution of other labels for facts already pleaded to on the other hand the make of an entirely new factual allegation which change the basis of the existing claim. The Tribunal has to decide whether the amendments sought is one of the minor matters or is a substantial alteration pleading a new course of action. Where an amendment merely involves relabelling facts that were fully set out in the claim form the amendment will in most circumstances be very readily permitted TGWU -v- Safeway Stores Limited EAT 2007. If, on the other hand, it introduces a whole new claim it is important to consider time limits as part of the overall balancing exercise. 106. In respect of time limits Mummery J observed that of a new complaint or cause of action is proposed to be added by way of amendment it is essential for the Tribunal to consider whether that complaint is out of time and if so, whether the time limits should be extended under the applicable statutory provisions. It is not an absolute bar however that a claim is out of time. The Tribunal has to consider whether the claim would have been out of time even if included in the original claim form. In terms of comparative hardship, the claimant suffers no disadvantage by the refusal of the amendments as the newly introduced claim would inevitably fail on the time limit grounds. 107. In respect of the timing and manner of the application the guidance in Selkent was “an application should not be refused solely because there has been a delay in making it there are no time limits laid down in the regulations for the making of amendments, the amendments may be made at any time – before, at, even after the hearing of the case, a delay in making the application is, however, discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made – for example the discovery of new facts or new information appearing from documents disclosed on discovery. Under the Section 109(1) of the Equality Act 2010 an employer is liable for acts of discrimination and harassment or victimisation (note the definition of employer/employee in the Act as opposed to in the 1996 Act) carried out by its employees in the course of employment. This says that anything done by a person (A) in the course of A’s employment must be treated as also done by the employer. Three things must be established:- (i) That there was at the relevant time an employment relationship between the employee and the alleged discriminator. RESERVED JUDGMENT Case No. 2423925/17 22 (ii) That the conduct occurred in the course of employment; (iii) That the employer did not take all reasonable steps to prevent the conduct in question. 108. Part of the Selkent balancing exercise may involve examining the proposed amendment claim on its merits, the weaker the allegations the less disadvantage there will be to the claimant in refusing to allow the claimant to introduce it. However, it has to be a clear-cut case. Adding an additional respondent under 2010 Act 109. In relation to the addition of a party Rule 35 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, Schedule 1 states that the Tribunal may on its own initiative or on the application of a party or any person wishing to become a party add any person as a party by way of substitution or otherwise if it appears that there are issues between that person and any of the existing parties falling within the jurisdiction of the Tribunal which it is in the interests of justice to have determined in the proceedings and may remove any party wrongly included. It is common in discrimination cases to in addition to the actual employer add a named individual who allegedly perpetrated discrimination. Rule 29 allows an application to add a party under Rule 34 to be applied at any stage of the proceedings even where the time limit for bringing a claim against a separate respondent has expired. The same principles apply as apply to any other amendment i.e. the Selkent Bus Company Limited -v- Moore 1996 EAT and as set out in Cocking -v- Sandhurst (Stationers) Limited and Another 1974 a Tribunal cannot refuse to add a respondent solely on the ground that a relevant time has expired. 110. The claimant also relied on the case of Mist -v- Derby Community Services NHS Trust 2015 where the EAT held that early conciliation is not necessary to include a new respondent where there was a discrepancy between the name of the prospective respondent given on a EC certificate and the name on the ET1. Further in Science Warehouse -v- Mills 2015 the EAT held that early conciliation is not necessary to amend an existing claim to include a new but related cause of action. Claimant’s Submissions (Summary) Employee 111. The roles and responsibilities document shows that the claimant did have specific tasks to do. 112. The claimant was specifically tasked with developing training materials and using the Canva. She was called Learning Consultant. Day-to-day tasks were established by way of a “to do” list at regular meetings. 113. The claimant began to undertake work from April 2015 when work was undertaken to set up the company i.e. purchasing a domain name, using Ms Neeley, tendering for a logo design with training being delivered to OC Limited on 11 August 2015, 21 October 2015, 25 November 2015, 11 February 2016 and 23 February 2016. Training was delivered for TGM on 14 September 2015 and 18 November RESERVED JUDGMENT Case No. 2423925/17 23 2015. Training was delivered for BC on 2 November 2015 and 14 December 2015. These clients were invoiced. The business was not launched in February 2016. A taster event was held on resilience training. It was clear that the claimant had to personally deliver work and that if the business was to use an associate this had to be approved by SB. The fact that the claimant was permitted to undertake work directly for a client prior to February 2016 and retain the money does not militate against this. She could not delegate or turn down work. She could clearly not offer a substitute. Control 114. It was submitted that the company controlled the claimant's work, for example SB refused to allow the claimant to continue with the work for GM Growth Hub. SB wanted a sick note. The respondent had a strong brand, independent of the claimant and SB. RB made a lot of the financial decisions. Salary 115. Payments were received from August 2015 onwards. They were irregular and largely expenses. SB in cross examination said they always intended to take a salary. A regular salary was received from September 2016 onwards. A payroll system was set up in September 2016 and a regular amount was mainly received. 116. Tax was deducted from September 2016. 117. The claimant received SMP. She submits SB knew about this and agreed it. 118. The claimant could not take holidays without SB’s knowledge. Personal Service The claimant was expected to undertake work personally as it evident from the various text messages Worker 119. It was submitted the claimant was a worker from April 2015 on the grounds that she did work for the company. Training material she used was provided by the company. The company paid all expenses. Emails and communications with the clients emanated from the company. Payments were made to the company, services were billed by the company. The claimant's payments came from the company. The claimant was accounted for to HMRC from September 2016 as an employee. The claimant received SMP. The claimant did not supply her services to the respondent via another limited company. Date of Employment 120. It is submitted that this was as soon as the company was incorporated. Amendments 121. The claimant is seeking to re-label her existing claim. She has already claimed section 18 discrimination. RESERVED JUDGMENT Case No. 2423925/17 24 122. The claimant submits that primarily her claims fall within the protected period but if they do not they are required to be put as sex discrimination. Deciding whether or not the claimant was still on maternity leave is fact sensitive, but this remains re-labelling some of the claimant’s allegations as sex discrimination rather than as section 18 discrimination. 123. The application was lodged on 25 January 2018 within the primary time limit. Adding Sarah Brennan as the second respondent 124. The claimant actually named Sarah Brennan on the ET1 form although the ACAS certificate was in the name of the current respondent, and early conciliation undertaken in respect of Mrs Brennan took place between 17 and 18 January 2018 within the primary limitation period. There is no requirement for any additional evidence and SB will be giving evidence anyway. 125. The claimant could be left without a remedy given that there appears to be no money in the respondent’s account. Respondent’s Submissions (Summary) I have noted that a number of matters were referred to in the respondent’s submissions which had not been canvassed in cross examination of the claimant. Accordingly, in line with the general rules of evidence, I have ignored these. It is something which does sometimes arise when a party has no legal representation. Employment Status Re: SMP 126. The claimant arranged this herself with the accountant who was not a lawyer. SB had no involvement in approving anything. Salary 127. The claimant did not receive a salary some months and certainly did not receive a regular salary. The agreed amount of £924.64 (eventually) was to take advantage of the personal allowance only. 128. The claimant was also given options as to how she would like to be paid 129. The use of the word “employee” from time to time by the accountant does not signify anything. Control 130. Nobody could tell the claimant what to do. SB and the claimant would agree what would happen although from time to time they disagreed and were obliged to resolve the situation. The claimant could not be dismissed. There was no requirement to have permission for holidays. The request for a sick note was RESERVED JUDGMENT Case No. 2423925/17 25 insignificant and because SB had no knowledge of the claimant being sick at the time. 131. The roles and responsibility document was created by the claimant in June 2016. 132. No profit was received by Mrs Dakin or Mrs Brennan until after the launch of the business in 2016. The first dividends of £1,000 each were paid in mid-April 2016. Any payments received were used to reimburse set-up costs already incurred. 133. The claimant completed associate work at the end of January for which she took the whole of the payment. 134. There was no requirement as to the number of hours the claimant had to work or why she had to work. Worker Status 135. From time to time the claimant could use someone else to perform her work without SB’s agreement. She did do work as an associate for other companies i.e. PU and MCF. 136. In July 2017 the claimant says, “I am trying to pick up extra bits to do on my own (associate stuff)” 137. The claimant carried out work for Ms Neeley in September 2017, therefore despite SB’s concerns about this the claimant undertook work as an associate or otherwise as and when she wanted. She did not own any materials. ( however this is new evidence it was not canvassed at the hearing) Amendments 138. The claimant returned to work on 8 May and everything after that is in the protected period. She is out of time in relation to her primary case in respect of non-protected period claims. 139. The claimant has legal knowledge yet chose not to make a claim of sex discrimination. The sex discrimination be treated as a new claim brought on 25 January and she would need to demonstrate a discriminatory act took place within the three months prior to 25 January. Amendment 2 – adding Sarah Brennan as a respondent 140. The respondent should be the company as this was the purpose of setting up the company and they were solely responsible for debts and obligations. If the claimant fails to establish employment status the claim will not go ahead in respect of all claims apart from the section 18. RESERVED JUDGMENT Case No. 2423925/17 26 141. Adding Mrs Brennan, who has always promoted women in the workplace, would cause her significant reputational damage. Conclusions I have considered both parties’ submissions, if any in particular are not mentioned it is because I have not considered them significant, relevent or correct. Equality Act 2010 status 142. Was the claimant an employee for the purposes of the Equality Act 2010.? The claimant does come within the definition of employee for the purposes of the 2010 Act as she clearly had to deliver work personally. He respondent argues the claimant could send a substitute. I disagree other consultants were used by agreement when neither the claimant or SB deliver the training but wished to fufil the contract for business reasons. In any event Gavraj establishes that the fact that an individual does not perform all of the work personally does not necessarily mean the dominant purpose test will not be met as long as the essential part of the work is undertaken. Worker Status under the 1996 Act 143. I find the claimant was a worker for the purposes of the 1996 Act (and unlawful deductions claim) in that she had to provide personal service. 144. In terms of whether she was in business on her own account she did on a few occasions do work for which she only received payment. In relation to PU this was agreed because the SB was still employed by Bruntwood. The MCF occasion was not objected to (although there has since been an issue regarding whether the claimant hid part of the payment,) at the time the fee was billable through the respondent. So the claimant was not obtaining and undertaking business separately for which she charged herself and received direct payment. 145. These were insufficient for a finding to be made that she was truly self-employed seeking work from wherever she could and that the respondent was simply one of her clients. There may be a case for saying that by the time the relationship was seriously breaking down the parties had in effect agreed to go their own way and the claimant was by that stage starting to find her own work however there was no evidence of the claimant actually undertaking independent work prior to her resignation. Neither was to do so acceptable to the respondent. For example, on 20 July SB said, “if you are working with them in projects then your partnering with them and it isn’t what we have always done I have never done that, I bring in work to the business for us to deliver between us or one of us, that is how we have grown the brand and what we agreed to do as a business”. The claimant replying, “I would never do a project without including you if it was something that you could do which is most things”. Further the claimant appeared to change her plans so there was no fixed intention eve then. Further the claimant’s solicitor wished to put invoices through the business in October 2017. 146. Regarding whether she had to personally undertake the work she did have to do the work personally either she would deliver it herself or co deliver it with SB She could not send a substitute. On the limited occasions ( two) that anyone other that RESERVED JUDGMENT Case No. 2423925/17 27 SB or the claimant delivered work this was not as a substitute for the claimant - it was by agreement because neither of them could deliver the work in question but thought it politic to accept the work to advance the brand Amendments to Sex Discrimination Claim under the Equality Act 2010 147. The claimant wished to amend to include a sex discrimination case in relation to detrimental treatment which occurred outside the protected period and an application to do so was included in her response in the Agenda form on 25 January 2019 which was emailed to the Tribunal and the respondent, and which was prepared for a Case Management Preliminary Hearing discussion to take place on 29 January. 148. Her claim form was submitted on 22 November 2017, she had resigned on 30 October 2017 and she had consulted ACAS on 31 October, the certificate being discharged on 2 November. The claimant had named Sarah Brennan in Section 2 of her claim form but the ACAS conciliation form was issued in the name of Evolving Edge Limited. 149. The claimant says that all the facts are contained in her original claim form and she is just seeking a relabelling on the basis that it could be argued she had returned to work and consequently that some of the incidents after May 2017 fall outside the protected period. 150. The application was lodged on 25 January 2018 which is within the primary time limit in any event, time would normally have expired for a discrimination claim on the 29 January even with an early conciliation extension. 151. The claimant’s application to amend succeeds it is a relabelling of already pleaded facts by putting them under a different section of the Equality Act 2010. It is the same cause of action, discrimination. It was applied for within the primary time limit and it would simply have been otiose to issue another claim. 152. There is no detriment to the respondent save the new label – they have known the allegations since the claim was issued. There would be considerable detriment to the claimant who may be barred from pursuing her claim under section 18 Equality Act 2010 if she cannot pursue it under Section 11. Adding a second respondent 153. The claimant obtained an early Conciliation Certificate against SB on 17 January which was discharged on 18 January, again, the ACAS certificate was obtained during the primary time limit. The facts she relies on are exactly the same as in the claim form which was originally served on this respondent. 154. The claimant is entitled to take action against an employed within the meaning of the Equality Act 2010 but also against an individual who it is alleged was involved in the discrimination, this is not something available under the Employment Rights Act 1996, accordingly legally the claimant has the right to do so. RESERVED JUDGMENT Case No. 2423925/17 28 155. I can see no objection to adding SB as a second respondent in this case. Whilst there may be little point in many cases where a respondent has indicated they take vicarious responsibility for the actions of their employee or agent and do not rely on the reasonable steps defence that is not the case here. In addition, the claimant has a strong factor in her favour that the company may have no resources to pay any award she obtains. Further she named SB in her claim form and obtained an EC certificate in her name within the time limit. 156. In these circumstances the claimant’s amendment is allowed adding R2. . 157. Whilst I appreciate the points made by the respondent it is that it could cause SB reputational damage and it results in the case being put in a very personal way which in many situations where the employer is taking responsibility for the actions of an agent or employee is unnecessary. However, it is the claimant’s right to do so and in this case she has cogent reasons for wishing to do so given the financial position of the first respondent. Employee Status 158. Was C an employee.? This is a complex case as is often the case where the putative employee is also a director of a company. There was no contract of employment in this case and therefore it requires consideration of all the elements of the employment status test as defined over the years by a considerable volume of case law. 159. The respondent’s ultimate argument is that they rely on the Dugdale case as authority for saying that where people are in business together and sharing a profit they are not employees. While the EAT upheld that decision every case is different on its facts and what was seen as significant in that case was that the claimant and the other directors were remunerated by taking money out of the company which was then credited to their director’s loan account and was repaid by declaring dividends out of the company’s profits. There was no express contract of employment and an Employment Judge declined to imply one, the EAT upheld that the Employment Judge was entitled to place weight on the remuneration arrangements, whilst it is true that the amount of pay can vary under a contract of employment it is not a normal feature of a contract of employment that payment is taken by means of loans in variable amounts repaid by dividends at the end of the year. 160. Whilst this is not the situation here as in this case we have a hybrid situation where the claimant and SB were paid up to the personal allowance as employees would be, then the intention was that they would receive a profit share over and above this and over time depending on the amount of profit the company made and with the percentage changing from an initial 50/50 to a somewhat more complicated arrangement. Payment of a regular amount described as salary is not determinative. The authorities caution against a ‘magic bullet’ approach. 161. The claimant emphasised in submissions that SB had agreed in cross examination that it had be the intention to pay themselves a salary when funds allowed. However the reality is that funds only allowed a limited salary,further that it was limited for tax reasons not just earnings reasons, that it would not be paid if the money was not there. In the 2016/17 tax year the claimant and SB could have paid RESERVED JUDGMENT Case No. 2423925/17 29 themselves more but they chose not to, taking dividends instead if they were available. 162. The claimant urged me to rely on the fact that the Accountant had described her as an employee in relation to the personal allowance situation however that is a somewhat simplistic approach, the Accountant’s view even if thoughtfully formed on the basis of some legal knowledge which it was not could not be determinative. The claimant also states that if she was not an employee this arrangement was a fraud on HMRC. 163. However, there are very many cases where an individual agrees to be employed on a self-employed basis and pays tax on that basis but then will later argue they were an employee and a Tribunal will agree with them. The tax situation is something which then has no doubt to be rectified. 164. In my view, the unreliability of the payments even in relation to the personal tax allowance and the fact that overall the payments were dependent on the business making a profit is a factor which militates against employment status. There was an agreement to receive the basic salary ( but only when there was predicted there would be enough money to do this) so it was not purely a profit share arrangement, but it was not so significant as to detract from the overall position and indeed that basic amount could not always be paid if there was insufficient money in the business’ account. 165. Neither is it a situation where it was contractually agreed the claimant would be paid £1,000 a month however she didn’t take that £1,000 per month but expected that it would be reimbursed and/or she would be entitled to sue the company for that £1,000 a month if it was not reimbursed. If for eg the JBX work was cancelled the claimant would not have expected to receive even the £928 unless the funds were otherwise available. 166. I also take in to account that on occasions RB gave the claimant options as to how she could be paid re salary and/ or dividends in order to maximise her tax position and take her student loans into consideration. Again that was inconsistent with employee status. Further she paid him at least two gratuities of £100 for the unpaid help he had given, again inconsistent with employee status. 167. Whilst in my view the remuneration arrangements are a significant factor all the relevant factors are considered on the basis that there is no “magic bullet” to resolve an employment situation. 168. In this case, there are a lot of factors, some of which point towards employee status, some of which do not. I have particularly looked at the issue of control. 169. I do not accept that the claimant was under the control of the respondent, the claimant was in a collegiate relationship with SB and all steps had to be agreed between them and/or confirmed within the principles the business had set out to run on, hence SB’s complaints that C partnering other people in July 2017 and her fury over the claimant tendering for work without her agreement such as the GM Hub. However, she could not stop her doing so she could only dissolve the business. RESERVED JUDGMENT Case No. 2423925/17 30 170. The development of principles governing the business does point to an overarching control of both SB and the claimant in that work brought in should conform with those principles, however firstly it was aspirational the principles did not constitute rules and the claimant deviated from this when she wanted ( running open courses for example, applying for opportunities without the SB’s knowledge) which ultimately led to the business ending. 171. Neither could the business as a separate entity control the claimant if she failed to show up for a training session the only recourse again would have been to dissolve the business .there was no disciplinary procedure which could have been accessed using for eg an independent HR company. 172. The claimant said she had to undertake the work brought in by the respondent but in fact there was room to say no as SB did when the work was something she felt was inappropriate. Whilst the claimant did not say no the possibility was there. 173. In relation to SMP again this was claimed by the Accountant without much thought being attached to the process and indeed the process was driven by the claimant. The fact that SB was copied in I do not attach much weight to as there was no conscious process by which SB was aware SMP was related to employment status. No one approved anything it was in effect the claimant organising her own maternity pay through the accountant. When SB said it was lucky they had received so much in the weeks which would be used for calculating SMP it was very much a bystander comment. I do not accept it shows SB consciously agreeing the claimant was an employee. That said ofcourse opinions are not wholly relevant if at all. 174. In respect of other matters cited by the claimant I find that the claimant did not have to obtain permission for holidays she simply had to let SB know the dates for planning purposes. There was no agreement as to how much holiday the claimant was entitled to, it was up to the individual. She was not required to produce sick notes, I accept SB’s explanation for why she required sick note on the one occasion. There were no policies or procedures. Nor were there any agreed hours. 175. Control is a difficult concept when directors are involved - it feels artificial and clearly the respondent in making its case mistook control for subordination to SB. However in any event there were insufficient factors to establish control. Note 176. Finally for the avoidance of doubt I heard a lot during the hearing from the respondent side about the fact that the claimant could undertake associate work as when she wanted however on reviewing the evidence and documents there was very little to support this proposition and I have not considered to be a major factor when assessing all three employment status issues. Length of Service 177. I find that the claimant if she had been an employee that she was employed from the 11 August 2015 when she started undertaking paid training for the respondent which was after all the core business the respondent was involved in. There was some preparatory work done before that but this was undertaken on a goodwill basis to get the business established and it was never intended that this RESERVED JUDGMENT Case No. 2423925/17 31 would be invoiced in any way. It matters not if the claimant ‘dragged’ on the process of ending the business relationship in order to acquire two years service. I make no finding in relation to that. 178. Accordingly, the claimant would have had sufficient service had she been an employee to qualify for unfair dismissal rights. _____________________________ Employment Judge Feeney Date: 16 July 2019 JUDGMENT AND REASONS SENT TO THE PARTIES ON 18 July 2019 FOR THE TRIBUNAL OFFICE [JE] RESERVED JUDGMENT Case No. 2423925/2017 1 EMPLOYMENT TRIBUNALS Claimant: Ms C Dakin Respondents: 1. Evolving Edge Ltd 2. Sarah Brennan Heard at: Manchester On: 17 December 2019 2020 (in Chambers) Before: Employment Judge Feeney REPRESENTATION: Claimant: 1st Respondent: 2nd Respondent: Miss D Ayres, Solicitor Not in attendance In person JUDGMENT ON RECONSIDERATION The judgment of the Tribunal on reconsideration is that: 1. In respect of allowing the amendment, the original judgment is not varied. 2. In respect of whether the claimant was an employee within the meaning of the Equality Act 2010, the judgment is not varied. 3. In respect of whether the second respondent was an agent of the first respondent, I find that the second respondent was an agent of the first respondent for the purposes of section 109 and 110 of the Equality Act 2010. REASONS 1. By an email of 30 July 2019, the respondent applied for a reconsideration of the Judgment issued on 16 July 2019. RESERVED JUDGMENT Case No. 2423925/2017 2 2. The respondent challenged the findings: (1) that the claimant was an employee within the meaning of the Equality Act 2010 and a worker for the purposes of an unlawful deduction of wages claim within the Employment Rights Act 1996; (2) that Mrs Brennan be added as a respondent; (3) that the claimant be allowed to amend her claim. 3. Following the hearing I requested further submissions from the parties on whether the second respondent came within the definition of employee or agent in order to add her as a party under section 110 of the Equality Act 2020. In the event the respondent had the advantage of seeing the claimant’s submission before she composed her own. The Law 4. Reconsideration of judgments is contained in rule 70 of schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. It says that: “(70) A Tribunal may, either on its own initiative or on the replication of a party, reconsider any judgment where it is necessary in the interests of justice to do so. On reconsideration the decision may be confirmed, varied or revoked. If it is revoked it may be taken again. (71) Except where it is made in the course of a hearing, an application for reconsideration shall be presented in writing within 14 days of the date on which the written record or other written communication of the original decision was sent to the parties, or within 14 days of the date when the written reasons were sent out (if later) and shall set out why reconsideration of the original decision is necessary. Process (72) An Employment Judge shall consider any application made under rule 71: (i) If the Judge considers there is no reasonable prospect of the original decision being varied or revoked the application shall be refused and the Tribunal shall inform the parties of that refusal. Otherwise the Tribunal shall send a notice to the parties setting a time limit for any response to the application by the other parties and seeking the views of the parties on whether the application can be determined without a hearing. The notice may set out the Judge’s provisional views on the application. (ii) If the application has not been refused under paragraph (i) the original decision shall be reconsidered at a hearing unless the Employment Judge considers, having regard to any response to the notice provided under paragraph (i), that a hearing is not RESERVED JUDGMENT Case No. 2423925/2017 3 necessary in the interests of justice. If the reconsideration proceeds without a hearing the parties shall be given a reasonable opportunity to make further representations. (iii) Where practicable the consideration under paragraph (i) shall be by the Employment Judge who made the original decision or, as the case may be, chaired the full Tribunal which made it, and any reconsideration under paragraph (ii) shall be made by the Judge or, as the case may be, the full Tribunal which made the original which made the decision. Where that is not practicable the President, Vice President or Regional Employment Judge shall appoint another Employment Judge to deal with the application or, in the case of a decision of a full Tribunal, either shall direct that the reconsideration be by such members of the original Tribunal as remain available or reconstitute the Tribunal in whole or in part.” 5. I allowed the respondent’s request for a reconsideration particularly in view of their contention that the evidence was misreported and/or misinterpreted. Respondent’s Submissions 6. I set out these in detail. They were amplified in evidence: (1) The business structure meant the claimant could not meet the criteria for worker or employee status. (I emphasise that the employee status is under the Equality Act 2010 not the Employment Rights Act 1996 as I determined that the claimant was not an employee under the 1996 Act). The respondent argued that the comment at paragraph 60 that “the claimant and SB were paid up to the personal allowance as employees should be, then the intention was that they would receive a profit share over and above this and over time depending on the amount of the profit the company made”. The claimant submitted this meant that paying the personal allowance took priority over the profit share but the respondent argued that the profit share agreement in place ensured that each director received 100% of the money for any work they brought in and delivered themselves, with different profit shares if the work was brought in by the other director and then the second director delivered some of it or vice versa. Therefore, it is possible that in some months if one of the directors had brought in no work nor undertaken any work for the other director there would be no money available and therefore there would be no salary paid, and they would still be liable to pay £160 to cover the running costs from their own personal finances. It was argued that if one or both of them had at least £924.64 in their individual pot after overheads and expenses had been paid then that would be taken first as salary and the balance would be paid as profit share. The profit share is set out at page 231 of the bundle. The claimant’s reply was she could not see how this was relevant to the issue of employment under the Equality act 2020 RESERVED JUDGMENT Case No. 2423925/2017 4 (2) The Judgment relies heavily on the intention to pay a salary which has been viewed without the correct context of the business structure, rendering this misleading. This refers to the same points as above. (3) The claimant's ability to substitute herself for work is incorrectly documented in the Judgment as this is something that she was free to do in an unlimited capacity. The respondent submitted the business was structured to run as two separate businesses, the claimant being entirely responsible for bringing in work for herself and executing that work. The claimant could ask R2 to help if she wished but ultimately the responsibility was hers. The respondent pointed out that very early on in May 2016 the claimant secured herself work with Swinton Insurance which she delivered without R2; in fact SB did not even know about this work. R2 submitted that either of them was able to use associates to deliver the work they brought in, and R2 would not even know whether she had done this. The claimant’s reply was that predominantly once the business was up and running work had to be undertaken personally and there were very few examples of this not occurring (maybe three at most), in at least one case the substitute was agreed. (4) The profit share agreement on page 231 stated: (i) A and B both bring in client and both deliver work. A – 50%, B – 50%. (ii) A brings in client and both A + B do work. A = 60%, B = 40%. (iii) A brings in client and does all the work: A = 100%. (iv) A brings in client and B does all the work: A gets 20%, B gets 80%. (v) A and B both bring in the client and A does the work: A = 80%, B = 20%. (vi) A brings in client and A co-delivers with or uses associate: A = 100% but pays associate out of that. (vii) A brings in client and B co-delivers with associate: A = 20%, B = 80%. B pays associate out of the 80%. This was evidence that associates could be used to deliver work brought in by either director Claimants reply A limited ability to substitute did not detract from the main premise of the business which was to deliver work personally (5) The respondent submitted that the facts in relation to paragraph 56 were incorrect in that the FCN client was brought in by R2 and that was why RESERVED JUDGMENT Case No. 2423925/2017 5 there was a discussion about using associates in delivering this work, and R2 needed to agree to any associates being used for that piece of work, otherwise R2 submitted the claimant did not need to have her agreement to use associates. Claimant’s reply: Same as above (6) The claimant did not need to turn up for work if she did not wish to, which a worker would have to, and the employer did not provide any work for her as would be the case with workers. The respondent submitted that workers would not be able to choose when to work and to choose not to work as R2 submitted the claimant and R2 were allowed to do; neither was there any obligation on the claimant to involve R2 in any of the work she brought in. Claimant’s reply: more relevant to employee status under the Employment Rights Act 1996. (7) The claimant was able to take on work for other people, which workers are not able to do. The respondent submitted that the Judgment referred to occasions where the claimant did take on associate work but finds this was infrequent. They submitted the claimant’s inability to secure associate work for herself should not be confused with whether she had the right to take it on: “As early as 24 April 2016 as evidenced in the bundle I suggested she contacted a trainer from another company, Mike, to ask if she could do some associate work, to which the claimant replied that she had already asked him for associate work and that he said he would give it to her when he had it, and that she had done this without discussion with R2. If “Mike” had been able to provide her with frequent associate work there is no question she would regularly have done it”. The respondent said the conversation on 20 July quoted at paragraph 64 of the Judgment arose because the respondent was concerned that the claimant may sign up R1 to not undertaking any work with any of the companies she did work for as an associate, and that consequently she could set herself up in direct competition, securing work with these clients but leaving R1 and therefore R2 unable to work with any of them. R2 was seeking to avoid this at this stage. Claimant’s reply: relevant to worker status not employment status under the Equality Act 2020. (8) The claimant was not entitled to minimum wage or holiday pay, which workers clearly are. Claimant’s reply: this is tautological as the fact that someone is not paid the minimum wage etc may only be a function of the incorrect labelling of their status by the putative respondent. (9) The actual employer was the claimant's own clients, which is not true of workers. The respondent submitted that if the claimant did not secure work for herself from her own clients she simply would not get paid. RESERVED JUDGMENT Case No. 2423925/2017 6 Claimant’s reply: once the work was obtained it was in effect the limited company’s work and the claimant was obliged to undertake it personally (10) The claimant had significant control of the business and could use that to her benefit, which creates an unfair situation for bringing this claim. R2 seems to be arguing here that the claimant could have protected herself as a fellow director against the matters she now complaints of. (11) Allowing the amendment is completely unjust due to potential bias occurring and the respondent being treated unfairly. (i) At the first hearing I had asked the claimant to prepare and send to the respondent’s details of what she was claiming was sex discrimination, and then the claimant could be cross examined regarding the amendments. I advised on the questions that might be asked, such as why it had taken the claimant so long to request the amendments. A document was sent over but the respondent believed the claimant had not evidenced the discrimination, and the respondents said they had no further opportunity to cross examine the claimant on the amendments as planned. The claimant then, through her barrister, declined to give any further evidence as she had found it too stressful on previous occasions. Accordingly, it was left that the matter would be covered in written submissions. The respondent complaints about this. (ii) The respondent objected to a comment in the Judgment that a number of matters were referred to in the respondent’s submissions which had not been canvassed in cross examination of the claimant. (iii) The respondent also complained that counsel for the claimant was given an extension for deadline to the responses beyond that originally agreed at the hearing and then missed that deadline, which meant they could read all the respondent’s responses before submitting their final responses which was unfair. Whilst the respondent objected the Employment Judge allowed those responses. Claimant’s reply: if there was any unfairness this is resolved by this reconsideration. (iv) Further, the amendment application was made in time so there was no need for live evidence from the claimant as live evidence would usually be about why the amendment application was not put in until past the deadline where the application is out of time. Accordingly, if that evidence is not required the matter is simply to be determined by submissions. (12) Facts relating to cross examination and accepted as evidence are incorrect within the Judgment: RESERVED JUDGMENT Case No. 2423925/2017 7 (i) Paragraph 12 of the Judgment is factually incorrect. It states that the claimant, Mr Jonathan Dakin, and Donna Neely, were not cross examined by the respondent but their evidence was accepted. The respondents say that they stated although they would not cross examine they did not accept their evidence. Claimant’s reply: the evidence given by both these individuals was not relevant or determinative of any of the matters now at issue. (13) Adding Sarah Brennan as a response is unjust and inequitable: (i) The second respondent submitted that she had been added even though the cross examination of the claimant regarding the amendments had not taken place and that the claimant had not provided all the information ordered in relation to the amendments. (ii) In addition the respondent stated that the claimant was seeking to destroy R2’s reputation, accusing R2 of financial fraud and stating that there were 18 unfounded allegations in the claimant's witness statement. R2 regards this as defamation, which could be devastating for her career. (iii) She averred that if she had known she was a respondent from the beginning she would have sought legal representation. (iv) R1 had now been dissolved and was never in a position to obtain legal advice. Claimant’s reply: the matters raised are irrelevant to whether second respondent should be joined or not. Claimant’s Submissions 7. The claimant mainly relied on the original submissions to the original hearing. In respect of the issue of whether the claimant was an employee within the meaning of the Equality Act 2010 the section under “Employment” relating to whether the claimant was working under a contract personally to do work under section 83 of the Equality Act 2020 included the following submissions: (1) That the claimant was described on R1’s website as a “member of the team” and it was made clear she would personally deliver work on behalf of the company. (2) The claimant was expected to undertake any work personally. This was clear from various text messages and the claimant’s witness statements. The text messages evidenced that the parties could not simply delegate or allow a substitute to undertake their work. The fact that prior to February 2016 the claimant was permitted to undertake work for a client and was allowed to retain some of the money is misleading given that the work was undertaken through the respondent, billed through the respondent, received from respondent, the claimant was paid that money RESERVED JUDGMENT Case No. 2423925/2017 8 because of exceptional circumstances, namely she was without other income during that period whereas R2 was still receiving an income from her previous employment. (3) There was nothing in the evidence to suggest the claimant was entitled to delegate her work or even turn it down. The claimant was obligated to work when offered work. She did not have the right to offer a substitute not has this ever been alleged by SB. Under cross examination SB agreed that she and the claimant always personally undertook the work on behalf of the respondent. Re amendment to include a complaint of sex discrimination (4) Details of the application are included in the case management agenda and additionally in the email to the EAT dated 18 May 2018. The claimant's original claim includes an allegation of discrimination. The particulars are set out after paragraph 57. In summary the submissions then went on to set out nine allegations between 29 August 2016 and October 2017. The claimant sought an amendment to include a claim under section 13 of direct sex discrimination in the event that the events pleaded were deemed not to come within the protected period for a section 18 claim. (5) The amendment did not plead any additional facts that were not in the original claim and merely involving the attaching of a new label to an existing set of facts. There was no prejudice to the claimant and the application was lodged on 25 January 2018 within the primary time limit in any event. Adding R2 (6) The claimant’s early conciliation certificate was in the name of the company, then the claimant lodged proceedings where she indicated she wished to include SB as a respondent. The Tribunal accepted a claim against the company only. Since then the claimant underwent early conciliation against SB. (7) The application was lodged to add SB on 18 January 2018 within the primary limitation period. (8) No additional evidence was required. (9) There is no evidential prejudice to SB: SB will have to give evidence in any event. (10) There was significant prejudice to the claimant as R1 is now dissolved. (11) SB is at the heart of the claimant’s allegations. Additional oral submissions from the claimant RESERVED JUDGMENT Case No. 2423925/2017 9 (12) Whether the profit share came before paying the personal allowance is of no practical difference. (13) The claimant received payslips and salary. Business expenses were paid. Holidays were advised to the other director. There is evidence that they had to agree holidays. There was not an unfettered right to do associate work. (Page 806) (14) Everything was invoiced through R1. No instances of substitution recorded. (15) In any event the right to substitute is not a complete answer to contract for personal services claim. (16) Regarding the amendment, SB was the perpetrator in many of the Pregnancy/Sex Discrimination Act claims. (17) Regarding adding the respondent, reiterating that there would be considerable prejudice to the claimant if R2 was not a part. The claimant had always meant to have R2 as a party. Respondent’s Response 8. The respondent stated: (1) It was never the case that holidays had to be agreed. (2) Salary was not paid until all expenses were paid, but there would not necessarily be any salary. (3) The claimant arranged SMP herself. (4) Regarding R2 asking for a sick note, this is because R2 was completely unaware that the claimant was ill. (5) MATB1 form was never provided. (6) There was evidence on pages 609 and 806 that the claimant was seeking associate work after she had resigned (queried this as she did not resign until later). R2 was supportive of the claimant taking associate work: it was simply the case that there was not any. (7) R2 would not know whether the claimant had substituted anybody for any work she undertook as the claimant would pay this out of her own profit share. Submissions on Section 110 Equality Act 2010 Claimant’s Submissions 9. The claimant agreed that there was insufficient evidence to conclude without a further hearing that SB was an employee for the purposes of section 110 but they submitted that she clearly was an agent for the purposes of the section. As a RESERVED JUDGMENT Case No. 2423925/2017 10 Director she was authorised to act for the first respondent in everything she did. Further the claimant maintained that Kemeh (in full below) was authority for saying that that the definition of agent is broader in discrimination law. (However, I do not think this is correct) Respondent’s Submissions 10. The respondent submitted that on the agency point as the claimant had full control of the company she could not be discriminated against by the company and SB could not be an agent as she would be an agent of the claimant in those circumstances. The claimant quite properly referred to Yearwood and Kemeh (in full below) 11. The respondent also made submissions regarding whether SB was an employee (although the claimant did not argue this) that also encompassed further submissions on whether the claimant was an employee for the purposes of the Equality Act 2010. 12. Further, in those submissions the respondent says that “I agree with her that I did have the authority to make decisions for myself and on behalf of the company…” (However, whilst I point this out submissions are not evidence) Law and Conclusions Adding an additional respondent 13. Where an employer or principal is liable for the discriminatory acts of employees and agents under section 109 of the Equality Act, the employer and agents may themselves be personally liable under section 110 of the Equality Act. Section 110 makes it clear that an employee or agent who commits an act of discrimination is personally liable. This is a change from the previous Discrimination Acts where the employee or agent was liable for knowingly aiding the employer to do an unlawful act. The employee or agent does not necessarily have to know that the act was unlawful, but it is still necessary that the employer or principal be vicariously liable under section 109 of the Equality Act. 14. Section 110 of the Equality Act 2010 says as follows: “(1) A person (A) contravenes this section if – (a) A is an employee or agent; (b) A does something which, buy virtue of section 109(1) or (2) is treated as having been done by A’s employer or principal as the case may be; and (c) The doing of that thing by A amounts to a contravention of this Act by the employer or principal as the case may be. (2) It does not matter whether in any proceedings the employer is found not to have contravened this Act by virtue of section 109(4).” RESERVED JUDGMENT Case No. 2423925/2017 11 15. Section 109 says: “(1) Anything done by a person (A) in the course of A’s employment must be treated as also done by the employer. (2) Anything done by an agent for a principal with the authority of the principal must be treated as done by the principal. (3) It does not matter whether that thing is done with the employer’s or principal’s knowledge or approval. (4) In proceedings against A’s employer (B) in respect of anything alleged to have been done by A in the course of A’s employment, it is a defence to show that B took all reasonable steps to prevent A – (a) from doing that thing; or (b) from doing anything of that description.” 16. Under rule 34 of the Tribunal Rules, Employment Tribunals have a wide discretion to add, substitute or remove parties to proceedings. In conjunction with rule 29, this applies at any stage of the proceedings. The same principles apply to an amendment to add a party as would to any other sort of amendment, therefore the principles set out in Selkent Bus Company Limited v Moore will apply. One of the issues to be considered is whether the application to amend or add a party is out of time. In Cocking v Sandhurst Stationers Limited & Another the claimant sought leave to amend his ET1 to join the parent company to the proceedings. The amendment was sought after the time limit for presenting an unfair dismissal complaint against the parent company had expired and the Tribunal refused leave. On appeal the NIRC (the relevant court at the time) held that the protection that the respondent gained from time limits depends not on when they first become parties but on when the ET1 is first presented. In this case the ET1 naming the wrong respondent had been submitted within the time limits and the Tribunal therefore had jurisdiction to amend the claim form. In many of the general principles which the NIRC then proceeded to set out it held that in these circumstances the amendment should have been allowed. 17. In Gillick v BP Chemicals [1993] EAT four months after issuing her claim against the first respondent the claimant sought to have BP Limited joined as a second respondent. The Tribunal held that the claimant’s complaints against BP Limited were time barred and declined to follow Cocking on the grounds that that case where the original and new respondent had a corporate relationship. On appeal the EAT forcefully rejected the Tribunal’s qualification to the approach downing Cocking. There was no time limit applicable where it was proposed to add a respondent in circumstances in which the ET1 had been lodged timeously. The presence or absence of a connection between the respondents is relevant if at all only as a matter to be taken into account by the Tribunal when exercising its discretion to allow the proposed amendment. Indeed, a new respondent can be added even after a decision on the merits has been reached. Rule 29 allows a party to be added at any time. RESERVED JUDGMENT Case No. 2423925/2017 12 18. It has been agreed that the issue of whether the second respondent was an employee cannot be addressed given that this was never addressed in evidence. However, the question of agency then arises, as section 110 refers to “employee or agent”. In this question case the question is: was SB acting as agent of the first respondent in respect of the matters complained of? The definition of an agent is, “a person who is authorised to act for (the agent’s principal) through employment by contract or apparent authority”. In this case SB was a director of the company. 19. There is quite limited authority on this, but I will refer to two cases: one is Bungay & another v Saini & others EAT [2010]. This concerned alleged discriminatory acts by members of a management committee who ran a centre called All Saints Haque Centre. The EAT upheld the Tribunal decision to make these individuals personally liable and stated: “All that was needed to be shown to make the respondents liable for the discriminatory acts was that they were authorised to manage the centre as part of their authority as directors. On that basis the ET was entitled to conclude they were acting as its agents even though they performed their duties in a discriminatory manner. The respondents were joint and severally liable as they had contributed to the same damage to the claimants.” 20. In is not necessary in an agency case for the principal to authorise a discriminatory act: it is sufficient that the discriminatory act took place within the broad authority the agent already had. This was established in Kemeh v The Ministry of Defence [2014] Court of Appeal where Lord Justice Elias stated: “Read literally subsection 2 might suggest that the principal must authorise the act of discrimination itself before liability arises but I agree with the EAT in Lana v Positive Action in Training (Housing) Limited [2001] that this would virtually render provision a dead letter. In my judgment Parliament must have intended the principal would be liable whenever the agent discriminates in the course of carrying out the functions he is authorised to do. It is a moot point whether the common law would in any event impose liability in these circumstances. The scope of the principal’s liability for an agency at common law is not entirely clear, although it seems likely he will be liable for certain tortious acts of the agents such as misrepresentation, provided they are sufficiently closely related to the agent’s actual or apparent authority. …The principal can be liable even though he has not authorised the act of discrimination itself. It follows the act itself may be, and no doubt usually will be, without the principal’s knowledge or approval.” 21. Section 109(3) of the Equality Act 2010 expressly provides the principal will be liable irrespective of whether he knew or approved of the act of discrimination. 22. More specifically on the agency point the issue in Kemeh was whether the common law line of authority on agency applied to statutory torts in the discrimination statute which had now become the Equality Act 2010. In Kemeh an employee of the MoD wished to bring a claim against an employee (A) of a RESERVED JUDGMENT Case No. 2423925/2017 13 subcontractor and in that situation, it was found there was no agency as A could not have been said to have been authorised to act in any way for the MoD. 23. . It relied on Yearwood vs Metropolitan Police Commissioner 2004 EAT. In Yearwood the proceedings concerned police officers who committed allegedly discriminatory acts in the course of exercising disciplinary and investigative functions. However, they acted under two sets of statutory regulations which made it clear that they were exercising their powers personally. This was specifically to remove the function from the ambit of the chief constable. It was found that as the chief constable could not do the act himself he could not delegate the act. Where a complaint of a similar nature was made against a civilian employee however the regulations did not apply and therefore it was agreed in that situation there could be an agency relationship. 24. The common law definition of agency refers to a situation where one person, an agent, may directly affect the relations of another person, the principal as regards yet other persons, called third parties, by acts which the agent is said to have authority to perform on his behalf and which when done in some respects are treated as the principal’s acts (the description is from Yearwood). At the heart of it is the principal’s willingness to have their legal position changed by actions of an agent. In Kemeh Yearwood was explained as not an agency situation because the chief constable was not the source of their (the officers) authority, neither was there any implied authority. 25. It agreed that the common law definition of agency should apply. The EAT in Kemeh had drawn a parallel with Jones vs Tower Boot CA 1997 where the common law definition of vicarious liability was rejected and instead it was said a commonsense approach should be taken. The CA rejected a submission to the same effect from Mr Kemeh’s counsel and said that the common law definition should stand although it was recognised that there is no agreement about the precise definition of agent as to whether in particular they have to be able to affect the principal’s legal relations with third parties. The CA in Kemeh accepted this was generally a moot point but not one which affected the case before them. The crux of the matter was did A’s contract with the subcontractor give her any authority to act as the MoD’s agent. The CA decided it did not as it would have to have constituted authorisation by the MoD on A to act on its behalf vis-a-vis the MoD’s own employees. However, a factor taken into account in Kemeh was that A was an employee of the subcontractor and whilst it was not always the case that a person such as A could not be an employee of one entity and an agent of another it was generally not the case. 26. In respect of the role of directors in a company, it is universally accepted that directors are effectively agents of the company, appointed by the shareholders to manage its day-to-day affairs, albeit in this case the shareholders and the directors were the same. The basic rule is that directors should act together as a Board, but the Board may also delegate certain powers to individual directors or to a committee of the Board, however in this case because the directors were only two and they were the shareholders the situation was much more simplistic. 27. The general duties under the Company Act to provide directors are: • to act within the powers of the company’s constitution; RESERVED JUDGMENT Case No. 2423925/2017 14 • to promote the success of the company; • to exercise independent judgment; • to exercise reasonable care, skill and diligence; • to avoid conflicts of interest; • to not accept benefits from third parties; • to declare interest in proposed or existing transactions. 28. A director is able to enter into a contract with a third party or with individuals it wishes to have as employees or consultants: the normal day-to-day work involved in a company. 29. Indeed, as a company is a legal entity not a person it has to have individuals to act on its behalf. In many cases there will be employees such as a chief financial officer or a legal counsel. However, in this case there were only two directors and only they were available to perform any actions the company needed or wanted to undertake. 30. There was considerable evidence regarding the director taking on responsibility for various items such as printers etc, and taking action in order to arrange that the company had bank accounts, internet accounts, etc. 31. Accordingly, either of the directors could act in order to set up and control a bank account or arrange an email account, for example, and insofar as the claimant's claims fall within everyday actions of the company SB will have been acting as an agent of the company. 32. Without the final list of the matters that the claimant relies on it has not been possible to ascertain whether any of those specific matters would clearly fall out with the ambit of a director acting as agent of the company, and therefore I am stating the overall principle and whether any of the specific incidents fall outside the ambit of SB’s role as a director/agent of the company could be determined at a final hearing or at a further preliminary hearing. Re Amendment to include section 13 Equality Act 2010 direct discrimination claim 33. At a case management discussion on 29 January 2018 Employment Judge Franey identified the following issue: pregnancy discrimination (section 18 Equality Act 2010). He referred to the relevant part of section 4 of the claimant’s response to the agenda form for the preliminary hearing. 16 issues were referred to. By the time of my Judgment I recorded that the amendment applied to nine issues, which are set out in paragraph 4 on pages 2 and 3 of my original decision. Most of these concern the second respondent’s actual actions, but today I did ask the claimant's representative to clarify whether any of those fall away now. All of the nine matters recorded are included in the agenda matters, which were described as pregnancy discrimination (a reference to section 18). Accordingly, in seeking the amendment it was a re-labelling exercise. RESERVED JUDGMENT Case No. 2423925/2017 15 34. The law on amendments was set out in full in my original decision and begins by explaining Selkent Bus Company v Moore [1996] EAT, saying that: “Whenever the discretion to grant an amendment is invoked the Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.” 35. The claimant applied for the amendment on 25 January 2018 within the primary time limit as set out in my original Judgment. Accordingly, I have nothing to add in respect of the actual amendment and have heard nothing which suggests there was any reason why the amendment should not be allowed. Of course, there is hardship to R2 but that arises from her being added as a respondent not from the re-labelling of an existing claim within the time limits. 36. Regarding the failure to allow the claimant to be cross examined I had suggested possible questions to be asked of the claimant in respect of the amendment, however this was before I was aware that the amendment application had been made in time. Where an amendment application is made in time there is no real reason for the claimant to give live evidence as to why the amendment was late as it is not late in this situation, and the matter routinely falls to be dealt with just by submissions. Employee status under the Equality Act 2010 37. The test in the Equality Act 2010 at section 83(2) states that: “Employment means: (a) Employment under a contract of employment, a contract of apprenticeship or a contract personally to do work.” 38. There is therefore a need to show a contractual relationship, however it need not be in writing. 39. An employee for the purpose the Equality Act can be someone who is in fact self-employed provided that they contract to personally provide work. In this respect the scope of discrimination is substantially wider than unfair dismissal. 40. In Mirror Group Newspapers Limited v Gunning [1986] G applied to MGM Limited to take over her father’s “agency” contract for the wholesale distribution of Sunday newspapers. When her application was rejected she complained to the Tribunal that MGM Limited’s refusal was on account of her being a mother with family commitments and therefore amounted to unlawful sex discrimination. It was held that G’s word did not come within the definition of “employment” in what was then the Sex Discrimination Act, as in order to fall within the scope of a contract personally to execute any work or labour the execution of such personal work or labour must be the dominant purpose of the contract. Personal responsibility for carrying out and the efficiency of the work was not in itself sufficient. This has been challenged in Mingeley v Pennock & Another t/a Amber Cars [2004]. Here the issue was whether an independent taxi driver who had a contract with the respondent purely for the provision of radio services, could bring a race RESERVED JUDGMENT Case No. 2423925/2017 16 discrimination claim.it was decided he could not as he had no contract to perform work personal he just had a contract for the provision of radio services. The dominant purpose of the contract he did have was for the respondent to provide radio services rather than his provision of a personal service. 41. The Supreme Court in Jivraj v Hashwani [2011] said that the dominant purpose was not the sole test for determining employment: the relationship between the parties should also be considered. In that case whilst an arbitrator had to perform his role personally he was not under the direction of any of the parties. 42. An issue which has emerged from the case law is the question of subordination to the putative employer. It was an issue in Halawi vs WDFG ltd CA (2014) However I find that case so far from this case as not to be helpful, it would be akin to the claimant seeking to say a client was her employer. 43. Indeed, as sole director shareholder s have been found to be employees under the employment rights act 1196 the issue of subordination must be nuanced as there the employee is acting for the company that they themselves wholly own. I considered this point in relation to whether the claimant was an employee under the employment rights act which I rejected for different reasons. In Bates Van Winklehof vs Clyde and co LLP (2014) in the context of a partners status to bring a whistleblowing case Lady Hale said that subordination’ is not a freestanding and universal characteristic of being a worker’ (Worker being the relevant nomenclature in a whistleblowing case). 44. The fact that an individual does not actually perform all of the work personally will not necessarily mean that the dominant purpose test will not be met, so long as the contracting party performs the essential part of the work he or she is free to assign or delegate other aspects of the work to another person. Therefore, a solicitor may delegate some legal work on a case to an assistant and rely on a secretary to carry to carry out ancillary tasks. 45. Contract to personally do work may be an implied one. In Manku v The British School of Motoring [1982] EAT, the EAT held that a self-employed driving instructor operating under a franchise agreement would be covered by the statutory definition of employment in what was then the Race Relations Act. The agreement contained no express obligation for the personal execution of the work, but the EAT looking at the substance of the transaction and not its form held that such an obligation could be implied in a substitution clause. 46. The question of whether an individual can provide a replacement may prevent a finding that the contract’s dominant purpose is to carry out work personally. In Robinson v High Swan Associates t/a Republic Nightclub & Others [2001] EAT, the EAT held that the fact that a self-employed DJ could provide a replacement if he was unable to appear himself did not detract from the fact that the dominant purpose of the arrangement was for the DJ himself to provide his musical services. It appears that the ability to provide a replacement was limited in some way i.e. that the individual cannot perform the work personally themselves for some reason, or the replacement must be suitable or approval is required. However, the blanket right to provide a substitute it unlikely to meet the requirement of personal services. RESERVED JUDGMENT Case No. 2423925/2017 17 47. Of course, a substitution clause must not be a sham, and the Tribunal should discern the true intentions and expectations of the parties. 48. In respect of whether there was a contract the usual principles apply offer and acceptance, consideration, intention to create legal relations. 49. I note however that I do not have detailed submissions on the contractual point but did not wish to delay the judgment. If the parties wish to provide further submissions on this point they may do so subject to a timetable being agreed. Conclusion 50. Having heard all the respondent’s submissions and references again to the evidence I still find that the claimant was obliged to provide personal service. 51. However, at the first hearing the matter of whether the test was no longer whether the predominant purpose was personal service was not discussed in depth. Consideration of whether there was a contractual obligation to provide a personal service has only recently emerged as a discrete issue and it is not clear how far the conventional tests apply. Certainly, a written contract is not required. 52. Here as the two directors brought in the work and there was an expectation that the work would be personally undertaken mainly by the director who brought it in but sometimes by the other director in full or part, hence the profit share agreement. However, this was relatively quickly abandoned as too complicated and it mainly arose that each director did the work they brought in, apart from one large tranche of work obtained by the second respondent. 53. Going back to first principles a contract arises where there is offer acceptance and consideration on both sides here there was. The company offered the prospect of remuneration, of an increasing profit share, of building the business. The claimant accepted the offer of bringing in work and delivering it in order to attract remuneration, to build the business and prosper. This actually happened it was not a pipedream or an aspiration which never ‘took off’. It was not a new start ‘tech’ company only existing on paper. Sadly, it went wrong but that is not relevant for determining this issue. In respect of legal relations a company framework was set up the claimant had implied contractual and fiduciary responsibilities to the first respondent. 54. Accordingly, I find there was an obligation to undertake work bought in personally. Of course, there is some artifice attached to this as with any limited company, but the work was brought in under the company’s umbrella and then there was an obligation to undertake it. 55. If subordination is relevant then I would find the subordination arose out of the requirements to build the business and its reputation by delivering high class training etc. 56. Therefore, I find that the test under section 83(2) is satisfied and do not vary my original judgment. Worker status for the purposes of Employment Relations Act 1996 RESERVED JUDGMENT Case No. 2423925/2017 18 I set out the law in the original judgement and do not rehearse it again. The main issue here was whether the fact that the claimant did some associate work, and would have done more if she could meant that she was in effect ‘in business on her own account’ and therefore not a worker for the purposes of the 1996 Act. I accept that the claimant at times would have done more associate work if it had been available, at the beginning before the business developed and at times when the first respondent business was quiet. However it is perfectly possible to undertake work in this way and still be a worker for the first respondent. The claimant was in business on her own account for the associate work but that was entirely separate from the situation vis a vis the first respondent where she did meet the criteria of a worker. If she had provided her services to the first respondent on an associate basis and the invoices reflected this the situation would be different but that was not what happened.in addition it would have been possible for the claimant to set up Caroline Dakin Ltd and invoiced direct clients on that basis but have an entirely separate business such as the first respondent to whom she had contractual and fiduciary obligations. Most businesses would not want that because of the potential competition but the first and second respondent did not object in this situation. Regarding the minimum wage point, ofcourse that is only payable for hours actually worked and it has not been established she did not receive this for hours worked. Further of course it maybe the case that she was not paid the minimum wage and should have been. Accordingly I do not alter my judgment in this respect either. Employment Judge Feeney Date: 18 March 2020 RESERVED JUDGMENT AND REASONS SENT TO THE PARTIES ON 3 April 2020 FOR THE TRIBUNAL OFFICE Public access to employment tribunal decisions Judgments and reasons for the judgments are published, in full, online at www.gov.uk/employmenttribunal- decisions shortly after a copy has been sent to the claimant(s) and respondent(s) in a case. RESERVED JUDGMENT Case No. 2423925/2017 1 EMPLOYMENT TRIBUNALS Claimant: Mrs C Dakin Respondents: 1. Evolving Edge Ltd 2. Sarah Brennan Heard at: Manchester (remotely, by CVP) On: 19 April 2021 26 August 2021 (in Chambers) Before: Employment Judge Feeney REPRESENTATION: Claimant: Mr J Lister, Solicitor Respondent: Mr G Mahmood, Counsel JUDGMENT The judgment of the Tribunal is that the respondent’s application that the claimant should pay a deposit order on the grounds that here claims have little prospect of success fails and is dismissed. REASONS Introduction 1. This hearing was listed because the respondent requested that an application for strike out and/or a deposit order was considered by the Tribunal. Today, however, the strike out application has not been pursued, and the question which arises for determination is whether a deposit order should be ordered against the claimant. The Law Deposit Orders 2. Rule 39 states: RESERVED JUDGMENT Case No. 2423925/2017 2 “Where at a preliminary hearing the Tribunal considers that any specific allegation or argument in a claim or response has little reasonable prospect of success it may make an order requiring a party to pay a deposit not exceeding £1,000 as a condition of continuing to advance that allegation or argument.” 3. Some of the case law on striking out is relevant as to whether a case has little reasonable prospect of success as it would be in a case of striking out where the test is no reasonable prospect of success. 4. In Ezsias v North Glamorgan NHS Trust [2007] it was said that: “To state the obvious an ET should be alert to provide protection in the face of an application that he has little or no prospect of success but it must also exercise appropriate caution before making an order that will prevent an employee from proceeding to trial in a case which on the face of the papers involves serious and sensitive issues. Further, it would only be in an exceptional case that an application to an Employment Tribunal will be struck out as having no reasonable prospect of success when the central facts are in dispute. An example might be where the facts sought to be established by an applicant were totally and inexplicably inconsistent with the undisputed contemporaneous documents.” 5. In respect of assessing prospects of success in a discrimination case, it is relevant to consider the law applying to proving discrimination. It is often observed that there is real difficulty for a claimant in establishing discrimination, and accordingly if a claimant can establish primary facts which suggest discrimination the burden of proof switches to the respondent, as there would rarely be evidence of overtly racist or sex discriminatory actions. 6. In Anya v University of Oxford [2001] Court of Appeal it states: “A Tribunal must consider the direct oral and documentary evidence available. It must also consider what inferences may be drawn from all the primary facts. Those primary facts may include not only the acts which form the subject matter of the complaint but also other acts alleged by the applicant to constitute evidence pointing to a racial ground for the alleged discriminatory act or decision.” 7. In Nagarajan v London Regional Transport [1999] it states: “Discrimination may well affect the mental processes of the putative discriminator, in come cases subconsciously, and it is necessary for the Tribunal to determine whether or not this is the case.” 8. Claimant's counsel also referred to the following cases: • Driscoll v Peninsula Business Services Limited & Others • Qureshi v Manchester University • The Commissioner of City of London Police v Mrs C Geldart UKEAT RESERVED JUDGMENT Case No. 2423925/2017 3 • A v B and Another [2010] Court of Appeal 9. In respect of Driscoll and Qureshi the point was made that the allegations need to be looked at in their totality and rather than treating every matter separately. Submissions Respondent’s Submissions 10. The respondent broadly relied on the following propositions to persuade the Tribunal that a deposit order should be made as the claimant had little reasonable prospect of success: (1) that the second respondent was an employee of the same nature as the claimant and therefore was not capable of discriminating against her; (2) that the second respondent was not acting as an agent; (3) that the claimant's claim was out of time and there had been no application for the Tribunal to exercise its just and equitable discretion; (4) that the matters relied on latterly as unfavourable treatment were not capable of being so regarded as they were simply negotiations pertinent to the winding up of the business and to the sale of shares; and (5) that no comparator has been identified. 11. The respondent in the hearing, having withdrawn the strike out proceedings, did still refer to the above points but also the additional point that the whole matter should be characterised as a partnership dispute and not as a discrimination claim. All the matters related to a partnership dispute. 12. Further, it was not accepted that there is no need for a comparator, as matters falling after the end of the protected period should be treated on a comparative basis. Claimant's Submissions Misunderstanding as to dates 13. The relevant dates were: (1) 31 October 2017 (ACAS consulted); (2) 2 November 2017 (ACAS certificate issued); (3) 22 November 2017 (ET proceedings issued); (4) 18 January 2018 (application made to re-label the case); (5) 25 January 2018 (application to add second respondent). RESERVED JUDGMENT Case No. 2423925/2017 4 (6) On this basis the claimant contends that the last incident in issue for the purpose of time limits would be 1 August 2017. 14. Further, any argument regarding continuing act cannot be determined at a preliminary hearing, and the respondent agrees that. 15. The claimant has indicated that where appropriate she will be arguing it would be just and equitable to extend time. 16. In respect of continuing conduct, the claimant will argue that there was a continuing state of affairs up to the date of lodging her claim and therefore all her claims are in time. 17. Further, presently the respondent has not filed a response to the main claim and therefore their position in respect of this is not clear. 18. The matters which arose post October 2017 pleaded at paragraphs 50 onwards include matters which arose in solicitors’ correspondence. The suggestion that correspondence emanating from lawyers cannot be discriminatory is misconceived. The reasons for the second respondent’s conduct cannot be viewed in isolation but considered in the context of the entire factual background of the claim. The chronology put forward by the respondent ignores events on 17 October 2017 where: (1) The claimant's solicitor had to specifically instruct the second respondent to refrain from sending correspondence directly to the claimant with inappropriate threats, and warning that she could be sued for slander; (2) On 27 October 2017 the second respondent imposed an artificially tight deadline and then followed this with yet another threat to notify clients of the claimant’s alleged fraud; (3) On 28 October 2017 the second respondent repeated her threat to inform clients of alleged fraudulent behaviour unless the claimant accepted her deadline to purchase shares; (4) On 6 November 2017 the second respondent again accused the claimant of acting in bad faith and deliberately withholding information. 19. There will be a number of matters that will be relied on for a course of conduct, all of which have been pleaded, and other matters from which the Tribunal will be invited to draw inferences, as is normal in a discrimination claim. The claimant has cited 13 matters from which she would ask the Tribunal to draw inferences, the overarching position being that the “fallouts” stem from the claimant's pregnancy and continued thereafter. Comparator 20. It is perfectly reasonable for the claimant to rely on a hypothetical comparator, however where the treatment of a worker is tainted by matters relating to a unique agenda there is no need for a comparator, such as in sexual harassment and obviously in pregnancy related cases. RESERVED JUDGMENT Case No. 2423925/2017 5 21. In addition, of course, the Tribunal may look at the reason for the treatment as a way of analysing the case rather than adhering to the comparator route (Shamoon v Chief Constable of RUC [2005]). 22. Another example where a comparator would not be necessary would be discriminatory comments, as they are intrinsically discriminatory. 23. The matters the respondent criticises, that a comparator in relation to the shares issue would have been treated the same, ignores the fact that there was a long history of dealings between the parties which the claimant characterises as discrimination because of her pregnancy and sex discrimination, and therefore it is not simply a question of pulling out one part of the series of acts and applying a male comparator to that part. The argument will be that the whole approach was tainted by a gender specific consideration, and as a man would never fall pregnant there cannot be an obvious comparator. 24. Whilst the respondent argues that post the protected period there should be a comparative approach, which is correct following Hertz, this case is slightly different in that inference will be asked to be drawn from the whole history of the case and not just viewing this end part in isolation. 25. Regarding the respondent’s arguments on agency, there has been a finding that the second respondent is an agent for the purposes of this case, but no determination on whether she was an employee. Paragraph 9 of the Reconsideration Judgment stated: “The claimant agreed that there was insufficient evidence to conclude without a further hearing that SB was an employee for the purposes of section 110 but they submitted she was clearly an agent for the purposes of the section. Therefore, the issue remains to be determined and should be determined at a full hearing rather than a further preliminary hearing, particularly given the number of preliminary hearings in this case.” 26. Further, paragraph 26 of the Reconsideration Judgment says that: “It is universally accepted directors are effectively agents of the company and as such shall have a range of fiduciary duties which are designed to avoid conflicts of interest and promote the interests of the company.” 27. There has been no specific evidence on this at this stage and the matter will be argued at the full hearing, but one approach is that in respect of the share dealings the second respondent treated herself as the alter ego of the company, as is evidenced by taking the first respondent’s money, altering the claimant's login credentials and otherwise acting on behalf of the company as she wished to personally without the first respondent’s express approval, and therefore must have considered herself authorised to do so. 28. The point is also raised about whether or not if the second respondent is an agent, has she behaved improperly? The matter certainly needs careful consideration. RESERVED JUDGMENT Case No. 2423925/2017 6 General criticisms of the claimant’s claim 29. These are as follows: (a) The fact that the Tribunal determined the parties were in a collegiate relationship does not mean the claimant suffered a detriment; (b) The profit-sharing arrangement was altered at the behest of the second respondent. This was to the detriment of the claimant, which establishes that even where there is a collegiate relationship a detriment can arise; (c) It seems to be suggested that a woman would not discriminate against another woman is totally unacceptable; and (d) The allegation the claim had not been in good faith has not basis and ought to be withdrawn. 30. In respect of merit, the second respondent cannot challenge the claimant as the second respondent has not yet submitted a response form. 31. Although the claimant's submissions were based on the striking out submissions, the same submissions were more or less relied on for the request for a deposit order. Conclusions 32. I find it is not appropriate to make a deposit order in this case for the following reasons. Merits Assessment 33. In respect of any merits assessment of the claimant's claim, it is correct that the respondent has not served a response to the factual allegations and therefore that must be the first step that is undertaken next. Time Limits 34. In respect of the time limits issue, the respondent has relied on erroneous timings and therefore there is no obvious case that the claimant is out of time. Nevertheless, that is a matter which will be considered at a full hearing and the claimant will have the opportunity to argue that if her claims are out of time that it would be just and equitable to extend time. Continuous Conduct 35. As agreed, this is a matter that has to be decided at the Tribunal and therefore it cannot be said this argument has little prospect of success. Neither is it something which is suitable for a separate preliminary hearing due to the need to hear evidence. RESERVED JUDGMENT Case No. 2423925/2017 7 Comparators 36. This is a moot point and will require careful factual analysis and the consideration of inferences at the Tribunal hearing. It will need evidence and it will need close consideration of motivation. Accordingly, this is not a matter that at this stage could be said to lead to the claimant having little reasonable prospects of success. Agency 37. Again, the question of agency is a technical and difficult question which will require consideration of a number of factual matters which have not yet been determined. Again, it is not suitable for a separate hearing for the same reasons given above. Summary 38. As the claimant has not had a deposit awarded against her the case can now proceed to a hearing, and I will arrange for a telephone hearing to take place to list the matter and give directions for the preparation of the case for hearing. 39. However, I will be issuing an order in respect of the second respondent’s defence and advising that she must file a defence by the end of November 2021. Employment Judge Feeney Date: 4 October 2021 RESERVED JUDGMENT AND REASONS SENT TO THE PARTIES ON 5 October 2021 FOR THE TRIBUNAL OFFICE Public access to employment tribunal decisions Judgments and reasons for the judgments are published, in full, online at www.gov.uk/employment-tribunal-decisions shortly after a copy has been sent to the claimant(s) and respondent(s) in a case. RESERVED JUDGMENT Case No. 2423925/2017 1 EMPLOYMENT TRIBUNALS Claimant: Mrs C Dakin Respondent: Mrs S Brennan Heard at: Manchester On: 30, 31 January, 1-3 February 2023. Then in chambers on 24 March 2023. Before: Employment Judge Leach Mr Taylor Mr Rowen REPRESENTATION: Claimant: Mr J. Dakin (claimant’s husband) on days 1-4. The claimant represented herself on day 5. Respondent: Ms R. Levine (Counsel) JUDGMENT The unanimous decision of the Tribunal is that the claimant’s complaints of direct discrimination (protected characteristic, sex) and pregnancy and maternity discrimination do not succeed. The claim is dismissed. REASONS Introduction 1. In 2015 the claimant and respondent set up in business together. At that time, they were close friends. 2. The claimant became pregnant in 2016 and told the respondent about this in August of that year. RESERVED JUDGMENT Case No. 2423925/2017 2 3. In 2017 (but particularly from August 2017), relations between the parties broke down. The claimant claims that the respondent discriminated against her because she was pregnant and/or because of sex. The respondent denies all claims. Preliminary Hearing in 2018/19 4. This claim was initially against Evolving Edge Limited (“EE”). EE was a limited company set up by the parties through which they conducted their business. Each party had a 50% shareholding in EE and each was a director. 5. The claim initially included a complaint of constructive unfair dismissal. EE disputed that the claimant was its employee and so could not bring an unfair dismissal claim. Employment status for the purposes of the Equality Act 2010 (EQA) was also disputed. 6. A preliminary hearing was listed to hear and determine these issues of status. Following a 4-day preliminary hearing in 2018-2019 (Preliminary Hearing), the Tribunal found that the claimant was not an employee within the meaning of the Employment Rights Act 1996 (ERA) but that she was an employee for the purposes of the EQA complaints. This meant that the claim of unfair dismissal could not proceed. In any event, on 17 September 2019, the first respondent company was dissolved so that claim could not have been pursued anyway. 7. The respondent seeks to rely on various findings of fact made at the Preliminary Hearing and recorded in the judgment. The claimant’s stated position is that only limited evidence was available to the Tribunal at that hearing and we must not assume that the facts are as then found; that we should look at issues afresh having the benefit of further evidence. We explained on day one of this hearing that we were likely to accept and adopt the findings unless evidence was provided to us (particularly any evidence that had not been available to the Tribunal at the preliminary hearing) that made us doubt the findings made. No such evidence was provided and, where appropriate, our findings of fact below reflect (and sometimes refer to) the Tribunal’s findings at the Preliminary Hearing (the ”PH Judgment”). Proceedings against Mrs Brennan. 8. Following the Preliminary Hearing, the claimant made a successful application to add Mrs. Brennan as a respondent. Given the dissolution of EE, the only complaints that could then proceed were those that the claimant was able to make against an individual employee or agent of her employer under section 110 of the EQA. The respondent accepted that she was an employee (for the purposes of the EQA) and agent of EE. The respondent’s relationship with EE was the same as the claimant’s had been (as determined by the Tribunal at the Preliminary Hearing). The issues 9. The issues for determination at this final hearing were refined and listed at a preliminary hearing on 9 March 2022. They are set out below. 1. The factual allegations 1.1 Did the respondent do the following things? RESERVED JUDGMENT Case No. 2423925/2017 3 1.1.1 On 29 August 2016, amend the “Ways of Working” document by adding “use contraception in the future”. 1.1.2 Between November 2016 and January 2017, requested and/or orchestrated a structure of the company which had the effect of reducing the claimant’s remuneration, to the substantial disadvantage of the claimant. The claimant was misled and manipulated; 1.1.3 In January 2017, offered the claimant an enhanced maternity package and then requested that it be withdrawn; 1.1.4 In July 2017, failed to offer any support and/or to enquire about/even mention the claimant’s health when or at any time after, she was informed the claimant had post-natal depression; 1.1.5 On 3 July 2017, accused the claimant of not wanting to grow the business since getting pregnant, of being disinterested in the business since becoming pregnant and used this as an excuse to force the claimant out of the business; 1.1.6 On 20 July 2017, sent hostile messages to the claimant which accused the claimant of not doing much work, applied pressure on the claimant to leave the business and indicated that she wanted the claimant to leave, stating that the claimant needed to resign before she took on any other work and also stated that she was not prepared to “carry on like this”; 1.1.7 On 2 August 2017, stated in a meeting with the claimant that when the claimant fell pregnant she thought “well I just need to go off” which was again a clear indication that the respondent meant to side-line the claimant and orchestrated a restructure of the business to facilitate this; 1.1.8 On 22 August 2017, made extremely hurtful and unfounded accusations that the claimant’s pregnancy-related illness was the fault of the claimant’s husband; 1.1.9 On 24 August 2017, pressured the claimant to sell her shares for an extremely low price despite the claimant suffering from post-natal depression (a pregnancy-related illness) and specifically requesting time and space to deal with the same; 1.1.10 Between August and September 2017, refused to authorise the company accountant to apply for advance funding from HMRC and withheld pre-agreed salary from the claimant, following the claimant’s second period of pregnancy-related absence due to post-natal depression; 1.1.11 Between August and October 2017, placing significant pressure on the claimant to leave the business, as follows: 1.1.11.1 Threatened to defame the claimant and blocked the claimant from undertaking additional work; 1.1.11.2 Removed the claimant’s visibility from all business finance systems, so the claimant had no way of seeing monies coming into the business by removing her from all business systems and emails whilst she was off with post-natal depression and refused to reinstate her access when she returned; 1.1.11.3 Removed the claimant’s access to the invoicing system, transferred the company’s money into her personal account, made a demand from the claimant for alleged overpayments, accused the claimant of fraud and made numerous false allegations against her; RESERVED JUDGMENT Case No. 2423925/2017 4 1.1.11.4 Removed the claimant from the company bank account by falsely declaring to the bank that the claimant was no longer a part of the business and did not disclose that she had done this to the claimant; 1.1.11.5 On 3 October 2017, made false declarations that one of the business’ main clients were no longer working with them as a way of preventing the claimant being paid the money she was due; 1.1.11.6 Pressured the claimant to resign or she stated that she would damage her reputation; 1.1.12 In September 2017, disclosed the claimant’s personal medical information relating to a pregnancy-related illness to a client of the business; 1.1.13 Between July and October 2017, the claimant was denied SMP payments as the respondent refused to authorise the accountant to request the SMP payment from HMRC on behalf of the claimant; 1.1.14 In November 2017, refused to allow the claimant to purchase her shares despite already agreeing to a new price. 2. Pregnancy and Maternity Discrimination (Equality Act 2010 section 18) 2.1 This complaint relates to the factual allegations above, except 1.1.14 2.2 Did the respondent treat the claimant unfavourably by any of each of those allegations? 2.3 Did the unfavourable treatment take place in a protected period? 2.4 If not did it implement a decision taken in the protected period? 2.5 Was the unfavourable treatment because of the pregnancy? 2.6 Was the unfavourable treatment because of illness suffered as a result of the pregnancy? 2.7 Was the unfavourable treatment because the claimant was on compulsory maternity leave / the claimant was exercising or seeking to exercise, or had exercised or sought to exercise, the right to ordinary or additional maternity leave? 3. Direct sex discrimination (Equality Act 2010 section 13) 3.1 This complaint relates to the factual allegations above, 3.2 Was any or each of the allegations less favourable treatment? The Tribunal will decide whether the claimant was treated worse than someone else was treated. There must be no material difference between their circumstances and the claimant’s. If there was nobody in the same circumstances as the claimant, the Tribunal will decide whether she was treated worse than someone else would have been treated ( a hypothetical comparator) . The claimant says she was treated worse than a hypothetical comparator. 3.3 If so, was it because of sex? 4. Time limits RESERVED JUDGMENT Case No. 2423925/2017 5 4.1 Given the date the claim form was presented and the dates of early conciliation, any complaint about something that happened before 1 August 2017 may not have been brought in time. 4.2 Were the discrimination complaints made within the time limit in section 123 of the Equality Act 2010? The Tribunal will decide: 4.2.1 Was the claim made to the Tribunal within three months (plus early conciliation extension) of the act to which the complaint relates? 4.2.2 If not, was there conduct extending over a period? 4.2.3 If so, was the claim made to the Tribunal within 3 months (plus early conciliation extension) of the end of that period? 4.2.4 If not, were the claims made within a further period that the Tribunal thinks is just and equitable? The Tribunal will decide: 4.2.4.1 Why were the complaints not made to the Tribunal in time? 4.2.4.2 In any event, is it just and equitable in all the circumstances to extend time? 5. Remedy for discrimination 5.1 What financial losses has the discrimination caused the claimant? 5.2 Has the claimant taken reasonable steps to replace lost earnings, for example by looking for another job? 5.3 If not, for what period of loss should the claimant be compensated? 5.4 What injury to feelings has the discrimination caused the claimant and how much compensation should be awarded for that? 5.5 Has the discrimination caused the claimant personal injury and how much compensation should be awarded for that? 5.6 Is there a chance that the claimant’s employment would have ended in any event? Should their compensation be reduced as a result? 5.7 Did the ACAS Code of Practice on Disciplinary and Grievance Procedures apply? 5.8 Did the respondent or the claimant unreasonably fail to comply with the ACAS Code? 5.9 If so is it just and equitable to increase or decrease any award payable to the claimant? 5.10 By what proportion, up to 25%? 5.11 Should interest be awarded? How much? The Hearing 10. This hearing took place over five days. We were provided with a bundle of documents with 1362 pages. This had been agreed. RESERVED JUDGMENT Case No. 2423925/2017 6 11. The respondent provided a supplementary bundle. Some of the documents in this bundle had been disclosed a month or more before the final hearing, others had only been disclosed a few days before. Whilst Mr. Dakin expressed some irritation at the late disclosure, he noted that it was appropriate to have “everything out in the open.” He was unimpressed with very recent information provided from a bank, noting the length of time that the respondent had to obtain this. We allowed the introduction of the supplementary bundle, making clear that Mr. Dakin would be entitled to ask the claimant (his wife) supplementary questions about the documents just disclosed and that he could ask the respondent’s witnesses about why such documentation has only been disclosed at this late stage. 12. The claimant’s brother (B) provided evidence on Monday afternoon as he was unavailable later in the week. The claimant gave her evidence next. The claimant’s witness, Laura Scarf gave evidence on the morning of day three. She joined the hearing by video. 13. Mr Dakin gave evidence on the afternoon of day 3. We then heard from the respondent’s father (F). The respondent gave evidence on day 4 and at the beginning of day 5. 14. The claimant’s husband (H) gave evidence on the morning of day 5 and the parties provided us with their written and verbal submissions on the afternoon of day 5. Findings of Fact Evolving Edge Limited. 15. EE was a limited company incorporated by the claimant and the respondent in April 2015. Incorporation of EE was one of various preparatory steps the parties took in 2015 to begin their new business. 16. The parties met each other in 2010 whilst working for the same employer and had become close friends. The friendship had become close enough for the claimant to be the godmother of the respondent’s daughter. It was through their friendship that they discussed and decided to set up in business together. 17. Each party owned 50% of the shares in EE. Each was appointed as a director. There were initially no directors other than claimant and respondent. 18. The claimant confirmed that paragraph 24 of the PH judgment accurately records circumstances relating to establishment of EE. 24. The business was set up with very little agreement and in fact business overheads were initially covered from savings, the claimant and [respondent] had equal rights over the bank account and only a single signature was required they had identical credit and debit cards, there was no shareholders agreement, no contract of employment and no pension or health provisions, no sick pay and no company policies or procedures, there were no job descriptions or holiday allowances. The claimant contended they agreed 30 days holiday but there was no such agreement documented or referred to in the many What’s App messages the claimant RESERVED JUDGMENT Case No. 2423925/2017 7 exchanged with [the respondent]. I prefer [the respondent’s] evidence that the only requirement was to tell the other when they intended going on holiday. If either party was unhappy as was considered later the company would have to be wound up /dissolved. 19. EE did not have premises. Each party was based at home although spent time away from home developing the business and/or undertaking training (one of the main activities of EE). The registered office of EE was the respondent’s home address. 20. Some paid for work was available through EE from an early stage although the parties also needed to spend time developing the business. 21. We have been taken through relevant events (and various messages between the 2 parties) in 2016. Having considered this evidence, we find that the personal friendship between the 2 was strong. The parties enjoyed each other’s company and made each other laugh. However, they were not always aligned in business. Through 2016 it became clear that the 2 parties had different ideas about the work they wanted to focus on as well as the steps they thought best to take in developing the business. Payments/profit share 22. Initially, the parties expected and agreed to split everything equally; each therefore being responsible for 50% of expenditure and each benefitting from 50% of EE’s income. 23. The first 6 or so months were challenging for both parties. Both had given up paid, secure employment; both needed their new business to provide an income soon after setting up. Their close personal relationship had to endure these challenging times and for the main part, in 2016, it did. 24. There were disagreements in the first half of 2016, around the appropriateness of some business expenditure. More fundamental though was a difference that was forming about the approach to business development and about fees. The respondent started to feel that she was attracting more profitable work and clients than the claimant and that she should receive more than 50% of the fees that she was provided under the arrangements that the 2 had agreed. 25. This led to the respondent proposing a restructure in November 2016. To illustrate her position the respondent provided the claimant with a list of clients, identifying who had brought those clients in and the income to date, generated by each client. 26. At the final hearing before us, the claimant emphasised on many occasions that the clients were not the respondent’s or the claimant’s but were clients of EE. We accept that as a fact but that is not inconsistent with the position put by the respondent; that she was attracting and securing work that generated many more fees than the claimant. The respondent identified the clients that EE had provided services to and put a name (the claimant’s or respondent’s) against each client name. The claimant did not dispute this at the time. 27. The respondent proposed an alternative business model; each party would effectively have her own profit centre but operating under the umbrella of EE, sharing RESERVED JUDGMENT Case No. 2423925/2017 8 certain costs and resources. Costs would be split, depending on who brought the work in and who carried out the work. 28. We have reviewed communications between the 2 parties from late November 2016, leading up to these arrangements being formalized in early 2017. Having done so (and considered the oral evidence of the parties) we find that the claimant approved the arrangements. We note here that the parties were equals. Each had as much influence as the other in the business. Having heard the claimant’s evidence, reviewed communications from her over the period relevant to this claim, we are unanimous in our view that, had the claimant disagreed with the arrangements; considered them to be unfair on her or in some other way, unreasonable, then she would have challenged them. She did not. Announcement of pregnancy. 29. On 23 August 2016, the claimant told the respondent that she was pregnant. The parties were at the respondent’s home, where there was a birthday party for the respondent’s daughter. 30. We accept the evidence provided by the respondent and her husband; that when the claimant told them her news, she indicated that she was not entirely happy with the circumstances, that the pregnancy was not planned. Crucially we find that the claimant made a comment to the respondent and H that they should use contraception. 31. There is plenty of evidence in the bundle that the respondent was positive, friendly and supportive about the claimant’s pregnancy. Examples include the following: respondent asked how the claimant’s scan had gone and made supportive comments (597); comments between friends about sleep, small children and the claimant’s “little bump” (601-603); comments about the baby’s sex (629); sharing ideas about names for the baby (636). Ways of working document. 32. At some time in mid-2016, the parties created a document called Ways of Working when the 2 were setting up the business. We note and agree with the description in the PH judgment (para 37) The document was a sheet of A4 with headings such as confidentiality, accountability, commitment to trying ideas etc. the most practical and specific point was stick to weekly meetings, update to do list, share important information. I agree with [the respondent’s] description of this document it was very general, it was clearly not complete, it did not contain any ‘instructions’ 33. In or around August 2016, shortly after the claimant told the respondent that she was pregnant, the respondent made a change to the Ways of Working document. She added the comment “use contraception in future.” 34. We make the following findings about this comment:- a. The respondent intended the comment to be more for her than the claimant. The 2 of them engaged in open discussion and these discussions RESERVED JUDGMENT Case No. 2423925/2017 9 included the respondent sharing her own thoughts about possibly planning another child – but her not being sure. b. The comment arose from the unsolicited advice that the claimant offered to the respondent and H (see 30 above). c. It was a lighthearted comment between 2 career focused mothers with potentially growing families who were close personal friends. d. The claimant made no complaint about his comment until these proceedings. Maternity Pay 35. We have made our findings above about the change in the way the income from EE was shared. These changes were agreed during the claimant’s pregnancy. Had no changes been made then one supposes that the claimant would have benefitted from 50% of the EE’s income during a period of maternity leave, even where 100% of the income came from the respondent’s work. The claimant told us that was not something she ever contemplated. She expected her income to drop during a period of maternity leave. As it was, the time taken off for maternity leave was very short and during this short time, the claimant received statutory maternity pay. 36. During the discussions about changing the income/profit share structure, the respondent had suggested a 95%/5% split. That would mean that the person who brought in the income would receive 95% of that income and the person who did not, would still receive 5%. As it was, however, the agreement reached was that the party who brought in the income would receive 100% of that income. 37. An email exchange between the 2 on 25 January 2017 (pages 711,712) best illustrates how and why the parties reached that position. The first email quoted below (from respondent to claimant) was sent during discussions about the new arrangements. The second email (claimant to respondent) shows the claimant’s agreement. Erm..yes..i need to dig out my scribbled notes will look this aft and send them I know one of them was 95/5 and I was wondering what you thought about that one? I was just thinking, the amounts we do separately aren’t going to be loads esp once youre back off mat leave. So I don’t know if it’s worth the faff of doing iit or whether we should just do 100% like you said. With your £500 with Louise, there will be corporation tax totake off & any expenses etc before the profit share, so it will literally work out about £15 or something to come to me.You'd still get 20% of the Swinton work I do which is the main separate coaching for me. I also need to be paid on 27th for our mortgage going out, but you could be paid on the 28th when your Swintonmoney comes in and you could just take all of that which makes it easier as there would be no allocation to me. I’m just conscious of Rob spending even more time on our accounts as he already spends ages and these allocations will make it more time consuming. He's more than happy to do it and I don't want us to have to pay Andrew to do it as he would charge but I do want to make it as easy as possible for him and if we’re allocating £5 and £10 here and there on RESERVED JUDGMENT Case No. 2423925/2017 10 every invoice it could get really messy.. If you'd rather stick with 95/5 I'm more than happy to though, or if you just want to do it while you’re on mat leave so you get a bit of extra money that’s absolutely fine. Just want to make it as easy as possible on the accounting front. X (Rob is the claimant’s husband. He had been assisting with EE’s accounts; the reference to Andrew is to the paid auditor/accountant used by EE) Claimant’s reply Yeah, I’m happy to change it to 100%. Like you said, it’s a bit of a faff to allocate and we aren’t talking huge amounts. I suppose the only thing I’m still not 100% on is the business development expenses. If you wanted to go to London, whilst I’m on mat leave, to meet with some potential clients I wouldn’t want you to be put off by thinking you would have to fork out £120 for a train fare that you may not get back if the work doesn’t convert. I know that’s the most expensive example that we’d have, and in reality it’s more likely to be the odd coffee here and there, but I would be happy to pay half for the trip. I’d trust your judgement that you were meeting potential clients and I would benefit in future. Do you know what I mean? I think we need to make an exception for something like this. x 38. One of the claimant’s complaints is that she was manipulated and misled in to agreeing this arrangement. It became apparent to the claimant later in 2017, that the respondent’s income had increased to such an extent by then that the 5% would have been worth a few thousand pounds to the claimant. We do not accept that the claimant was manipulated and misled. The claimant was an equal partner, the finance\al arrangements were not complex and not somehow hidden from the claimant. Clearly the respondent wanted to renegotiate the remuneration terms to benefit the respondent. The claimant knew that and agreed to the proposed new arrangements. 39. The claimant was able to make a claim for Statutory Maternity Pay. This was done with the assistance of EE’s accountant, Andrew Lea (“AL”). AL also provided advice about making a request to HMRC for advance payment of the maternity leave, in the event that EE could not afford to first make the payment and then wait for repayment from HMRC. EE took that step, successfully applying for advance payment from HMRC. It did so because it was not able to fund the SMP upfront. 40. The claimant began her maternity leave on 6 March 2017. Her baby was born on 19 March 2017. Return from Maternity leave. 41. The claimant’s maternity absence was short. She was committed to the new business. We have no doubt that she felt obligations to the new business, and this RESERVED JUDGMENT Case No. 2423925/2017 11 motivated a quick return to work; we are also sure that she decided that she needed to return quickly to earn an income. 42. Whilst the claimant returned to work on 9 May 2017, she did carry out training on 10 and 11 April 2017. These were regarded as Keeping In Touch (KIT) days. There is a dispute between the parties about what happened about this training and the arrangements for the training, It is not directly relevant to the complaints raised and we limit the detail of our fact finding here to the following comments:- a. Through travelling and engaging in training on these KIT days, the claimant showed a significant commitment to return to work and to the new business, even though that was far from easy for the claimant and her family. b. The respondent was appropriately supportive to the claimant during this time. c. The respondent gained a view that some pressure for the claimant’s early return came from the claimant’s husband. We note the comments from the claimant at 804 (that her husband thought she should carry out training on 10 nd 11 April) as well as the text exchange at page 829, by which the claimant made clear to the respondent that the decision that the claimant return to work so soon after childbirth was her husbands. Claimant stating intentions to leave EE. 43. At the end of June and beginning of July 2017, there was significant correspondence between claimant and respondent. There was also correspondence between respondent and claimant’s husband (JD) on 3 July 2017. This is documented in the bundle. 44. The claimant and respondent engaged in a long text exchange, late in the evening of 30 June 2017 and continuing on the morning of 1 July 2017 (pages 957-962). In this exchange the claimant expressed her unhappiness with her involvement in the business, that she did not feel that she and the respondent were working as a team, that she wanted to work within more of a team environment, that she was concerned that EE was at that stage “punching above our weight” that the business was overstretched (particularly a reference to the respondent having just then worked on an overseas project for 10 days) and how she wanted the 2 of them to meet more and discuss the business. The claimant was being open about her feelings towards EE at that stage 45. The respondent was also open. She noted how much her client network had grown and was growing, about how hard she was working to keep up with this, how she wanted to “ramp up” the business aggressively and that she needed to do that because her growing network needed more capacity to support it and deliver on the work generated. 46. The respondent also expressed concern for the claimant. Those concerns were between friends as much as (if not more than) business partners. We are sure that without the close friendship that then existed between the parties, neither would have been so candid in the messages. RESERVED JUDGMENT Case No. 2423925/2017 12 47. In this exchange, the claimant raised the prospect that she would leave the business. Claimant - . I sort of feel like I need to make a decision too, for my own mental health, and obviously so you know where you stand x Respondent: What will you do if you don't do this? I think I've gone into a bit of shock tonight I'm worried a bit about my future as I obviously need to think about finding associates for work I could bring in and I will need stuff like northern gas to keep going. You're not going to stop training are you?? X Claimant: I'll probably go back into a business to be fair. I miss a team to bounce ideas off, even though they were crazy at [client name and previous employer] they were funny to work with! Oh god you don't need to worry about your future. [client name] will keep giving you work, as will [client name] , plus [client name]! Your private coaching is going amazing too and you love that. 48. On 3 July 2017, the claimant sent an email to the respondent which ended with the following paragraph: “ I’m glad we’ve talked about it. I wouldn’t feel right leaving and not saying how I feel. At least we tried, more than most people would do! I feel much clearer today that its all going to be ok. I’ll work out what we have left to do jointly and send it over to you.” 49. The claimant’s husband (JD) contacted the respondent by text on 3 July 2017. He told the respondent that he was contacting her without the claimant’s knowledge. JD was also candid in his message. We note the following extracts. “I know you won't have had any idea that she was feeling so low. I don't know exactly what she has said to you as it's getting blood out of a stone with her sometimes. The truth is she's been really struggling with the amount of work and balancing this with looking after [child’s name].” “she’s got post-natal depression and prior to this she had pre-natal depression. The past 12 months have been horrific at times and she’s not been getting any enjoyment out of her work.” “I do think that she went back to work too soon and this has had an impact on her mental state.” “ My personal view is that if its making her miserable then its time to face up to it and develop an exit strategy without leaving you in the lurch.” 50. These and other comments were made during a dialogue during which the respondent expressed sympathy and support, which we find was genuine. 51. The respondent did not mention this dialogue to the claimant. Her (reasonable) view was that JD had contacted her in confidence. RESERVED JUDGMENT Case No. 2423925/2017 13 Dialogue of 20 July 2017. 52. The bundle includes an exchange of messages between the parties which took place on 20 July 2017, as the claimant was packing to go on family holiday. 53. The dialogue started about holidays and difficulties with packing. Then the respondent noted that she might be a little quieter whilst the claimant was away and would start to put together a document about what tasks need to be done to assist in their business separation, the claimant’s handover, and ongoing involvement in delivery of client work. At this stage the claimant was delivering training on various projects for clients that the respondent had secured. Under the arrangements that had been put in place from the beginning of 2017, the claimant would be remunerated for a proportion of the work. The respondent asked the claimant to have a think about how much involvement in the work she would want going forwards. 54. The claimant replied Thanks but I've got everything pretty much finished that I need to, I need to send a few bits out tomorrow but I can do that from the car. I think it's just the [various client projects including international women’s day] that we need to do together isn't it? I'm trying to pick up extra bits to do on my own (associate stuff) to tide me over money wise until January. I'm happy to carry on with [client name], it's a bit in limbo at the moment as we are waiting on stuff from them so not loads we can do at the moment x 55. The respondent replied to ask what the claimant’s plans would be in January. Oh that's good, are you thinking of applying for jobs in Jan or are going to set something up on your own now for the associate work and maybe carry that on? That international women's day thing might be one we have to pull unless they're okay with us both being from separate businesses and coming together to deliver it. Just think it might be weird to promote a business we're not both part of (and probs won't even exist by then). We can think about that one though and how to manage it x 56. The respondent then raised the subject of the claimant’s formal resignation. This was prompted by the prospect that the claimant might accept associate work (meaning work for competitor training providers/HR consultancies) and there was a concern that if she did so, she might compromise EE. Sometimes restrictions are placed in agreements between provider organisations and associates which oblige associates not to compete with the organisation that they engage with. Both claimant and respondent acknowledged such restrictions existed although the claimant’s position was they were not always contained in agreements between associates and consultants but sometimes they were. 57. The claimant responded:- a. By assuring the respondent that she would not take on associate work that would compromise EE RESERVED JUDGMENT Case No. 2423925/2017 14 b. Stating that she was not sure what she would do in January, it was “a way off”, that she was happy to continue with the separate work until the New Year, they shouldn’t turn down work and that the 2 of them should probably meet up to discuss things. 58. This was not satisfactory as far as the respondent was concerned. She told the claimant that she wanted to “drive the business forward” and that she could not do that as she wanted to, if the 2 of them remained as shareholders. 59. The exchange of messages continued. The claimant stated some uncertainty about what to do and said that the 2 of them needed to talk; the respondent stated that the claimant had made clear that she wanted to leave and, following this news, could not leave things “in limbo.” We both had a strategy at the start of the business to grow it rapidly. Your circumstances then changed and for the last 12 months we haven't been aligned in driving the business forward and you haven't brought in much work or done much BD. That's fine, but we can't operate as a partnership when we're so misaligned, or after the conversations we've had over the last few weeks. How can we develop a business when we're driving it in completely different directions and one director has said they want to leave? To be honest I think the conversation needs to be about which one of us exits now if you've changed your mind, but I think if either of us has been backed into a corner it's me, given you've just announced you want to leave and are now saying actually you don't after all but not only that, you're also going to start working with other partners and change the business model. 60. The message exchange continued. The claimant noted that she may be changing her mind, but that texting does not work as a form of communication and again proposed they meet. Meeting between claimant and respondent on 2 August 2017. 61. On 2 August 2017, shortly after the claimant had returned from holiday, the parties arranged to meet in a coffee shop. One of the complaints that we need to make a decision on concerns an allegation by the claimant that the respondent made a comment at this meeting that, when the respondent found out about the claimant’s pregnancy, she decided that the claimant just needed to go (meaning she needed to leave EE). We note the way the claimant describes this in her witness statement (para 88):- “She was overly smiley and clearly trying to get me on side. She said that when I told her I was pregnant she thought ‘right I just need to go off now’ I was pleased that she admitted this as I finally felt like I wasn't going mad and her feelings about my pregnancy had been negative resulting in her side lining me.” 62. The respondent simply denies that she made this comment during the discussion. 63. In an email dated 29 July 2017, the respondent set out what she saw as the options for them and to agree to meet. This email sets out the basis of the meeting. RESERVED JUDGMENT Case No. 2423925/2017 15 Before you went away you told me that you felt that we should meet to discuss what we do next and, on reflection, I think you are right. I think that we should meet and sort things out as soon as possible because we both seem to be finding the current situation very stressful. For me there only seem to be two practical options. The first is for us to wind up the business and us both set up again under our own brands. Ensuring as little disruption as possible to the clients I brought in would be my priority with this option, as I’m sure it would be for you with yours. Doing this would enable us to cleanly wrap up any outstanding tax and VAT bills and communicate out to our clients what is happening in the way we would like. The second option would be for me to, effectively, buy you out with some money for the work you have put into building the brand. We would have to sort out the future operating details but it would mean that you could still earn money from EE in the future as an associate. One advantage of this for both of us is that there would be no disruption to the clients and no particular need for any communication to go out. Of course this is looking at things from my point of view and please don’t regard any of this as an ultimatum – it isn’t. We are friends and I am happy to discuss with you any alternative suggestions that you want to put forward. I hope that whatever solution we decide on, we can remain friends and work together in the future. Let me know when we can meet. 64. We also find (having been referred to message exchanges in the bundle) that: a. the meeting ended on friendly terms. b. The meeting ended with the respondent agreeing to make a payment to the claimant for her shareholding, although there was no discussion about how much that would be. 65. We find that the respondent did not make the comment stating that, when the claimant became pregnant, she just needed to leave (“go off”). We make this finding for the following reasons:- a. Because, having heard the respondent’s evidence, we are satisfied that was not (and never was) her view: b. accepting the claimant’s evidence that the respondent was trying to get her on side (see para 61 above), such a comment would have been inconsistent with that strategy. c. The meeting ended on friendly terms. 66. As noted above, the parties left the meeting with an expectation that the respondent would make a payment for the claimant’s shares. The claimant was to consider what amount she would agree to. RESERVED JUDGMENT Case No. 2423925/2017 16 67. Unfortunately, the parties had different expectations about how much should be paid for the claimant’s shares, which then led to their relationship breaking down. However, it is clear that in the meeting between the parties on 2 August 2017, both agreed they should go their separate ways, and both agreed (in principle at least) the mechanism for that to happen. 68. The claimant wrote to the respondent late in the evening of 9 August 2017, with a valuation of £35,000. She also noted that, whilst she recognized their quasi partnership would end, she would have preferred to delay it until the end of the year rather than making such a big decision at that stage. She also made a number of suggestions as to clients and existing work. 69. The respondent replied on the morning of 10 August. The reply was brusque. The respondent stated her views in terms of valuation of EE; that it had no assets other than goodwill. Although she did not state this in the reply, we are clear that her (and the claimant’s) expectation was that each would retain their own client base on the claimant’s departure from EE. 70. In her reply the respondent put a counteroffer to the claimant; that the claimant could purchase the respondent’s 50% shareholding for £25,000; noting that if the claimant did not accept this offer (discounting the claimant’s valuation by £10,000) then: “I will find it very difficult not to believe that your offer was either not a genuine attempt to resolve the situation, or it was an attempt to rip me off, particularly in light of the conversation we had last week about how Evolving Edge is effectively worth nothing, and certainly no more than the remaining bits of guaranteed future work; which is, at this stage of the year, very little. 71. Relations between the 2 then quickly deteriorated. The respondent continued to push for certainty and at this stage proposed other options, that she would resign as a director or petition for EE to be wound up. She set out what she said would be difficult consequences for the claimant should the respondent follow either of those options. 72. On 16 August 2017, the claimant’s husband (JD) contacted the respondent and suggested a meeting to try to find a resolution. He also informed the respondent that the claimant had been diagnosed with post-natal depression. 73. We note from the email exchange that the respondent was reticent about a meeting. Having been told by JD that he wanted to explore a resolution, she replied that he would be wasting his time to try to meet and persuade her to pay a large sum of money. However, she offered to meet JD at a coffee shop close to her home (and therefore some distance from the claimant’s and JD’s home). 74. JD did not consider the respondent’s correspondence or the offer to meet at the proposed location as at all constructive. His reply (dated 18 August 2017) was as follows:- “I genuinely feel like a line needs drawing under this. Caroline will start to feel much better once you are out of each other’s lives and she can get on with what she wants to do. I’ve spoken to Caroline and we want to wind the RESERVED JUDGMENT Case No. 2423925/2017 17 company up straight away. You can then both arrange to work with your existing clients in separate businesses. As it’s not my company can you make the necessary arrangements for the winding up of the company? I’ll make sure any necessary paperwork is completed from this end.” 75. On the same day the claimant sent an email to the respondent: “Please take this email as confirmation that I wish us to dissolve the company. I authorise [JD] to communicate with you and act on my behalf. I will handover the Fulcrum work today and save any notes in the Fulcrum folder.” 76. As a result of these communications, the respondent started to look at the process and costs of winding up a company. She found that it took time and would also require the payment of costs to cancel subscriptions early and some professional fees. In all about £1640 would have to be paid (page 1063). 77. Later, on the same day (18 August) the respondent’s husband emailed the claimant detailing the monthly allocation of income. He raised an overpayment issue – stating that the claimant had been overpaid on a previous project by about £480. 78. JD replied on the claimant’s behalf (21 August 2017, page 1064), disputing that there had been an overpayment and asking that communications be with him. He also stated his discomfort with the respondent’s husbands ongoing involvement with EE’s finances and that he (JD) should also check the details before they are submitted to the auditor. 79. In the same email, JD also referred to the claimant’s illness, noting that she had been declared by her GP, as unfit to work from 14 August 2017. JD noted that the illness was maternity related and fell within 39 weeks of the birth of their child. JD informed the respondent that, as such, the claimant qualified for statutory maternity pay. 80. Later that day, the respondent emailed EE’s auditor: Hi Andrew, As I mentioned in my emails this morning, Caroline has requested a wind up of the company and her husband is trying to get involved in the finances, despite having no accounting experience. Caroline is suffering with mental illness and, as per her husband's email this morning, has apparently been signed off sick. He is attempting to act on her behalf in the business and, without any understanding of how we run our accounts, seems keen for Caroline to be paid money that isn't owed to her. He has implied that this will possibly be paid back at a later date but has not confirmed this. This makes me incredibly nervous, particularly given that Caroline, in her fragile mental state, still has access to the bank account - also meaning he can access this via her. Every penny in our business account has been allocated already, so removing any that isn't owed will leave a shortfall in our VAT or corporation tax provisions. For this reason, I have sought advice and taken some steps to safeguard the company assets, and just wanted to make you aware. RESERVED JUDGMENT Case No. 2423925/2017 18 I have transferred out of our business bank account all allocated money, leaving in a buffer of £150 to cover any overheads for the remainder of the month. This money I have transferred totals £19,629.29 with £10,662 of this allocated to our VAT bill due in September and £8967.29 allocated to our corporation tax provision. We have £5-6k due in through invoices to cover the corporation tax shortfall. This money will be held safely in my personal account and ring fenced to be used solely for business matters. I will keep a full log of any transactions and ensure the money due in is allocated accordingly. As mentioned this morning, although Caroline has asked that the company be wound up immediately, she has not taken the practical steps I asked her to in order to make this happen. In her current state, it is of course possible that she will change her mind. 81. On or about the same day the claimant took steps that ensured the respondent could not access a shared Microsoft office account and a business account called Canva. She also took steps to freeze EEs bank account (albeit that it did not at that stage have very much money in it as the respondent had just transferred funds to her own account – see above). The respondent raised this and other matters in emails with JD dated 22 August 2017. We need to note 2 other subjects covered in the respondent’s long email sent early in the morning of 22 August 2017. a. The respondent replied to that part of JD’s email that stated the position about the claimant’s illness and entitlement to SMP. This is what the respondent said:- As with the situation when Caroline claimed her initial maternity pay, where there is not enough money in the business to cover payments, an application to HMRC to claim the money upfront must be made. This is what you will need to do again in order for Caroline to receive the SMP you would like to claim. Andrew helped Caroline to arrange this last time. b. The respondent also commented about the claimant’s mental health and JD’s involvement: That brings me to your repeated suggestion that Caroline and I need to separate our lives in order for her mental health to improve. That implies that either I, or our relationship, is responsible for, or contributes in some way to, her current mental state and I utterly reject any such suggestion. Instead, I recommend that you look at your own support, or lack of it. There can be no question that her problems stem from pregnancy and birth, but how supportive were you? I had told Caroline to take whatever time off she felt was necessary after having Jack, but only nine days after the birth, she sent me a message to tell me that you thought she should do the sessions in London on the 10th and 11th of April, which involved an overnight stay. In other words, RESERVED JUDGMENT Case No. 2423925/2017 19 you wanted her to be back at work, and away from her newborn overnight, three weeks after giving birth. Yet on July 3rd you sent me a message including “I do think that she went back to work too soon and this has had an impact on her mental state with feelings of guilt etc”. I’m not surprised she has struggled with the sort of support you have given her. When I met Caroline recently, we came to the joint conclusion that the only way to move forward was to separate and me buy her shares in Evolving Edge. To help her and ease things with the clients, I offered to let her continue with committed work under the brand. She seemed happy at the end of the meeting and I left believing that we had retained our friendship and would work for each other in the future. Then you got involved! The next thing was that Caroline suddenly demanded £35k for her shares. I am certain that this figure came from you because, not only had Caroline agreed that Evolving Edge was virtually worthless, only somebody who has no idea how to value a business like Evolving Edge could come up with such a ridiculous figure. That nonsense put an end to the deal. I feel sorry for Caroline because if, as you appear to claim, you are so concerned about her and believe that an immediate separation would benefit her health, I fail to understand why you torpedoed the deal, unless it was simply greed on your part. If the deal had gone through, the separation could have been immediate with the prospect of work when she was feeling better, and she would have got a few thousand pounds. As it is, it is going to take months to achieve a final separation, it will cost you money and, if you are lucky, you will walk away with nothing. Frankly that is exactly what you deserve.” 82. On the same day (22 August 2017) EE’s auditor contacted both parties to tell them that his fees were outstanding and that winding up the company might not be the best option. He asked whether they had discussed one party buying out the other party to allow EE to continue. He also made clear that instructions would have to be joint instructions; otherwise, he would need to resign. 83. The claimant replied directly to the auditor. She did not copy the respondent. In her correspondence, she informed the auditor of her maternity related sickness and asked him to process her SMP as he had done when on maternity leave (page 1077). 84. The auditor’s response is as follows: I’m afraid I can’t do anything without approval from both Directors. With regards to the SSP/SMP even if the payroll is processed this month it will need to be reclaimed from HMRC and it’s a slightly more RESERVED JUDGMENT Case No. 2423925/2017 20 complicated process than with the SMP advance funding. EE would need to pay or owe you the amount and then reclaim it from HMRC, which can take up to six months. 85. The respondent also replied directly to the auditor without copying in the claimant. I appreciated your suggestion about one of us buying the other out. This was what I had hoped would happen as it would be far more straightforward. It still may be an option but I probably won't know for a couple of weeks, so will keep you posted on the situation. I will ensure that, whichever way it goes, all of your fees will be paid. 86. From 14 August 2017, the claimant was too ill to work due to post-natal depression. As noted already, she had by then frozen EE’s account. The respondent took steps to remove the claimant from the account, so that the account could be restored for business purposes. In so doing, she was required to complete a standard bank form stating tha the claimant had left the business. We accept the respondent’s evidence that account (1) she informed the bank of the true position (the claimant’s long-term absence due to illness) but that (2) it was only by completing this form that steps could be taken by the bank to restore the account. Respondent’s offer to purchase shares – 24 August 2017. 87. By 24 August 2017 and following the events noted above, relations between the parties had deteriorated further. The respondent took some legal advice and then wrote a long letter to the claimant, setting out the respondent’s position and offering to buy the claimant’s shares for £5000 plus writing off what the respondent believed to have been an overpayment to the claimant. She made clear the offer was non-negotiable and had to be accepted by 8 September 2017. The respondent also set out alternatives:- a. To wind up the company (and provided the claimant with a form to sign if that was her preferred option) b. That the respondent would resign as director (but retain 50% shareholding), inform clients that she no longer had an active role in EE and proceed in business by herself. 88. The claimant replied to note the respondent had behaved unlawfully in withdrawing funds from EE’s account and to require the return of those funds before the account would be unfrozen. She also raised queries about other funds having been withdrawn and told the respondent that by changing access arrangements to Canva, she had not denied the respondent access to company materials. 89. The respondent then went away on family holiday for 2 weeks. Whilst away she found that learned that changes had been made to an IT account called 1and1. This account included EE’s website domain. The claimant regarded the 1and1 account as a company asset. The respondent regarded it as her own account as she had personally set it up and funded it for some time. Whether or not this was a company asset we find the claimant changed the access arrangements to the account without informing the respondent and in doing so, denied access to the respondent. RESERVED JUDGMENT Case No. 2423925/2017 21 90. In turn, the respondent denied the claimant access to a finance account called Quickbooks. 91. We find that both parties behaved badly towards each other between 21 August and 8 September 2017; the respondent, in removing EE’s funds from the bank account and denying the claimant access to Quickbooks; the claimant in disrupting access to various accounts used by the parties to carry out their work. 92. These actions were part of (and an indication of) the increasingly bitter dispute between them. Events leading up to the claimant’s resignation 93. The parties were unable to reach agreement. The claimant rejected the respondent’s proposals of 24 August 2017 (see para 87 above) and proposed mediation. The respondent did not initially dismiss the idea but first wanted to understand what outcome the claimant wanted, given her rejection of the respondent’s proposal (one of which had been to wind EE up – a resolution that had been proposed by the claimant). 94. The claimant instructed solicitors and the respondent received correspondence from them, dated 29 September 2017 (page 1178). This correspondence set out the claimant’s position:- c. That the respondent was in breach of her fiduciary duties as she was indicating she would take steps to ensure EE ceased trading; d. That the respondent must return withdrawn funds to EE’s account 95. In their letter the solicitors also raised the issue of SMP, noting that the claimant had returned to work on 25 September, but she had not received her SMP. 96. The solicitor’s letter made an allegation of discrimination:- We are informed that the above steps have arisen as a result of our client’s pregnancy and maternity leave along with her recent discussions regarding her future with the company. We must remind you that as a director you must always act in the best interests of the company, and any private decision by our client to consider exiting the company must be treated as a separate matter. Until any agreement has been reached as to any parties exit or otherwise from the company, both of you must continue working in the best interests of the company failing which you face potential personal claims for any loss suffered by the company as a result of acting in contravention to your fiduciary duties. 97. We note the second of the 2 paragraphs quoted above. The respondent was aware of her obligations to the company and that, whilst the parties had agreed the new profit share arrangements, the success she was starting to see with client work, was likely to benefit the company as a whole. That is why she wanted a resolution to the impasse the parties found themselves in. RESERVED JUDGMENT Case No. 2423925/2017 22 98. The claimant’s solicitors wrote separately under cover of without prejudice, offering to sell the shares and settle all claims for a global sum of £13,520 (which included a valuation of the shares at £6000 and the sum of £6200 that was claimed as being owed to the claimant under certain contractual arrangements with a client). 99. The respondent replied by letter dated 3 October 2017 (page 1187). It is a long reply, in which the respondent sets out her position and denies that she has behaved improperly. The respondent also sets out her complaints about the claimant’s behaviour. 100. Included was the respondent’s reply to the claim that the claimant was owed a sum of money from work carried out for a particular client. The respondent denied that and also noted that client had “reassessed any involvement Evolving Edge has in their future training delivery, overriding any previous discussions regarding intended training.” 101. The respondent also made a counteroffer, that she would buy the claimant’s shares for £4000. 102. Long correspondence between claimant’s solicitor and respondent continued, the detail of which is not relevant except as referred to below. 103. On 12 October 2017, the respondent increased her proposed purchase price to £6000 but also made an alternative proposal that the claimant could purchase the respondent’s 50% shareholding for £6000. On 17 October the claimant, via her solicitors, accepted the proposal in principle that she would buy the respondent’s shareholding. The terms used were these our client is prepared to buy your shareholding in Evolving Edge for the sum of £6,000 provided you confirm that the VAT and corporation tax is up to date and that there is sufficient monies held back to cover any future liability for Vat and corporation tax with regard to jobs already invoiced and paid. 104. On 15 October 2017, the respondent wrote an open response to correspondence from the claimant’s solicitors dated 11 October 2017 in which they had made further allegations of unlawful behaviour by the respondent. In her letter dated 15 October 2017, the respondent accused the claimant of acting unlawfully in a number of respects, including an accusation that the claimant had wrongly used the respondent’s name to try to win business and an accusation that the claimant had “fraudulently” gained access to the respondent’s IT accounts. She then stated in the same letter that she would contact certain clients and contacts to “give them a factual account of your appalling behaviour.” 105. In that same letter she demanded the claimant’s resignation. We are satisfied that, by this letter, the respondent was attempting to place pressure on the claimant and advisers to accept the offer that the respondent had made (and remained outstanding as of 15 October 2017) which was to purchase the claimant’s shareholding for £6000. She did so because the parties were in dispute and the respondent wanted a resolution. RESERVED JUDGMENT Case No. 2423925/2017 23 106. As it was, the claimant agreed in principle that she (the claimant) would purchase the respondent’s 50% shareholding for £6000. Some conditions applied to that, which were to ensure funds were available to pay tax liabilities. 107. By letter dated 18 October 2017 (page 1222) the respondent agreed to this proposal “as long as this takes place without undue delay.” 108. As it was, the parties did not manage to reach agreement. The claimant sought further assurances and other disputes arose, including who should retain certain clients. By letter dated 27 October 2017 (page 1231) the respondent tried to force the position by applying an ultimatum of completion by 30 October 2017. This is what she said: - You have stated that your client seeks a speedy resolution but I see no evidence of that. In my considered view, your client’s changes of mind and wishes have been a deliberate strategy to delay a solution to the problem, and I would regard her challenging a list of clients that she has already agreed to as another time waster. As far as any amendments are concerned, I find it difficult to imagine anything that is not another time-wasting and unnecessary complication. The deal on the table is very simple. I have offered to sell all my shares in Evolving Edge to your client for £6,000. She either wants to buy them and is in a financial position to do so, or she doesn’t. So, I request that you respond to my previous correspondence no later than 3pm on Monday 30th October with a definitive answer. By this time, twelve days will have passed since I sent my response. If you fail to do so or make a further attempt to delay resolution, my offer to sell my shares will be withdrawn and I will continue on the course I previously stated. As well as reserving my right to take legal action, this will, of course, include giving past, present and prospective clients a factual account of your client’s fraudulent and damaging behaviour. When you threatened action in relation to slander, you obviously ignored the word “factual” that I had used. I can assure you that I would never fabricate anything regarding your client’s behaviour and have absolutely no need to do so. Because your failure to respond has left a very short time until Monday, I will send a copy of this directly to your client. I can assure you both that this really is the last opportunity to reach an amicable solution. 109. It is clear to us from their letter of 27 October 2017 (in response to the respondent’s letter of the same date) that the claimant’s solicitors were hopeful of a completion. However further issues were raised for agreement. One of those was the transfer of the EE website domain name. We note here the respondent’s refusal to transfer this over. We also note that in her evidence to the Tribunal she accepted that was perhaps petty on her part. She is right; and we would have reached that conclusion had she not volunteered it. However, that was far from the only issue which arose, and which stopped the parties from reaching agreement. RESERVED JUDGMENT Case No. 2423925/2017 24 110. By 30 October 2017, the claimant reached the decision that she was not prepared to buy the respondent’s shareholding on the basis of the terms proposed. Instead, she submitted her resignation from her position as director of EE. It is a long resignation letter and makes various allegations against the respondent, many of which are repeated in this claim. Other relevant findings 111. We record our findings about 2 other relevant matters. Comments made by the claimant in a discussion between her and Janine Smith. 112. This is relevant to issue 12. We heard evidence from Laura Scarf that it had been reported to her by Janine Smith (JS), that the respondent had told JS that the claimant was suffering from post-natal depression. Notably we did not hear from Janine Smith herself. 113. LS’s evidence is that JS told her about this discussion/disclosure on or about 10 September 2017. But she was unable to provide evidence about when the discussion between JS and the respondent had taken place. 114. The respondent’s evidence is straightforward – that she did not make this statement to JS; also, that she was on holiday in Dubai during the first 2 weeks of September. 115. We need to decide whether it is more likely than not that this comment was made. Our decision is that it was not. It is relevant that SB was overseas during the first 2 weeks of September. There is no evidence about when or where this discussion took place. 116. We did not hear evidence from JS. 117. We did hear from the respondent (the only other person allegedly involved in the discussion), and we accept her evidence on this point. She did not disclose to JS that the claimant had post-natal depression. Submissions 118. We heard submissions from both representatives and thank them for these. We also received written submissions from Ms Levine. 119. We have considered oral and written submissions in reaching our decisions on the various complaints and issues. We do not set out the submissions in this judgment although reference is made to some submissions in our conclusions below. The Law Equality Act Claims Time limits RESERVED JUDGMENT Case No. 2423925/2017 25 120. Section 123 EqA provides that complaints may not be brought after the end of 3 months “starting with the date of the act to which the complaint relates” (s123(1)(a) EqA. This is modified by section 140B – providing for early conciliation. 121. Section 123(1)(b) provides that claims may be considered out of time, provided that the claim is presented within “such other period as the employment tribunal thinks just and equitable.” 122. We note the following passages from the Court of Appeal judgment in the case of Robertson v Bexley Community Centre [2003] IRLR 434:- “If the claim is out of time there is no jurisdiction to consider it unless the tribunal considers it is just and equitable in the circumstances to do so.” (para 23) “…the time limits are exercised strictly in employment and industrial cases. When tribunals consider their discretion to consider a claim out of time on just and equitable grounds there is no presumption that they should do so unless they can justify failure to exercise the discretion. Quite the reverse. A tribunal cannot hear a complaint unless the applicant convinces it that it is just and equitable to extend time, so the exercise of discretion is the exception rather than the rule.” (para 25 of the Judgment) 123. The EqA itself does not set out what Tribunals should take into account when considering whether a claim, which is presented out of time, has been presented within a period which it thinks is just and equitable. We note the following:- a. British Coal v. Keeble EAT 496/96 in which the EAT advised, when considering whether to allow an extension of time on just and equitable grounds, adopting as a checklist the factors referred to in s33 of the Limitation Act 1980. These are listed below:- • the length of and reasons for the delay; • the extent to which the cogency of the evidence is likely to be affected by the delay; • the extent to which the party sued had co-operated with any requests for information. • the promptness with which the claimant acted once he or she knew of the facts giving rise to the cause of action. • the steps taken by the claimant to obtain appropriate professional advice once he or she knew of the possibility of taking action. b. Rathakrishnan v Pizza Express (Restaurants) Ltd [2016] ICR 283, EAT. This case noted that the issue of the balance of prejudice and the potential merits of the claim were relevant considerations to whether to grant an extension of time. Direct Discrimination – section 13 EA 124. Section 13 states: RESERVED JUDGMENT Case No. 2423925/2017 26 “A person (A) discriminates against another if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.” 125. An important question for us is whether the claimant’s sex was an effective cause of the treatment which we find. As was made clear in the case of O’Neill v. St Thomas More Roman Catholic School [1996] IRLR 372 the relevant protected characteristic need not be the only cause of the treatment in question. We also note the following:- a. The House of Lords in Nagarajan v London Regional Transport 1999 ICR 877, HL, held “discrimination may be on racial grounds even if it is not the sole ground for the decision……..If racial grounds or protected acts had a significant influence on the outcome, discrimination is made out.” (judgment of Lord Nicholls) b. Paragraph 3.11 of the EHRC Employment Code which states that ‘the characteristic needs to be a cause of the less favourable treatment, but does not need to be the only or even the main cause’ 126. Direct discrimination under section 13 is about less favourable treatment. It requires comparison. Where a claimant does not have an actual comparator to rely on, then it is possible to rely on a hypothetical comparator, one who resembles the claimant in all material respects, except for the relevant protected characteristic. In other words, a man in substantially the same circumstances. 127. For the avoidance of doubt, we note the issue of a comparator only raises in complaints under section 13. There is no requirement for a comparator ( real or hypothetical) in relation to the complaints made under section 18, which we comment on next. Pregnancy and Maternity discrimination - Section 18 EQA 128. The relevant parts of section 18 state: (2) A person (A) discriminates against a woman if in the protected period in relation to a pregnancy of hers, A treats her unfavourably- (a) because of the pregnancy, or (b) because of illness suffered by her as a result of it (3) A person a discriminates against a woman if a treats her unfavourably because she is on compulsory maternity leave (4) A person (A) discriminates against a woman if A treats her unfavourably because she is exercising or seeking to exercise or has exercised or sort to exercise the right to ordinary or additional maternity leave. (5) For the purposes of subsection 2 if the treatment of a woman is in implementation of a decision taken in the protected period, the treatment is to be regarded as occurring in that period even if the implementation is not until after the end of that period. RESERVED JUDGMENT Case No. 2423925/2017 27 (6) The protected period, in relation to a woman’s pregnancy begins when the pregnancy begins and ends: a. if she has the right to ordinary and additional maternity leave at the end of the additional maternity leave. Or if earlier when she returns to work after the pregnancy b. if she does not have that right at the end of the period of two weeks beginning with the end of the pregnancy 129. This section protects expectant and new mothers against “unfavourable treatment” by their employer, and not “less favourable” treatment as in section 13. It is not necessary therefore to identify a comparator. 130. The claimant makes allegation of unfavourable treatment under section 18 EQA, in respect of each complaint except the final one. We note here:- e. The terms of section 18(6) EQA (see above) in defining the “protected period” during which the protection under section 18 applies. f. The terms of section 18(5) which provides that where a decision is taken during the protected period, then the treatment is regarded as having occurred during the protected period even when the implementation of that decision occurred after the end of the period. g. The decision in Lyons v. DWP Jobcentre Plus UKEAT/0348/13 that the protection under section 18 EQA ends at the end of the protected period. As such, it did not apply in that case to the claimant’s dismissal after a period of illness, even though the illness was pregnancy related. 131. The principles from the cases and materials referred to at para 125 above, apply to section 18 claims; that is to say that pregnancy/maternity does not need to be the sole or even the principal cause of the treatment complained of. It must have been a material influence. Burden of Proof 132. We are required to apply the burden of proof provisions under section 136 EA when considering complaints raised under the EA. 133. Section 136 states: “ (1) This section applies to any proceedings relating to a contravention of this Act. (2) If there are any facts from which a court could decide in the absence of any other explanation, that a person (A) has contravened the provision concerned, the court must hold that the contravention occurred. (3) But subsection 2 does not apply if A shows that A did not contravene the provision.” 134. We have also considered the guidance contained in the Court of Appeal’s decision in Wong v. Igen Limited [2005] EWCA 142. This case concerned the test as set out in discrimination legislation that pre-dated the EqA but the guidance provided in there remains relevant. It is the annex to the judgment particularly that provides RESERVED JUDGMENT Case No. 2423925/2017 28 guidance (the amended Barton guidance). We note the following particularly from the guidance (recognising that the guidance is now relevant to the application of s136 EqA) a. That it is guidance only and not a substitute for the statutory language b. It is for the claimant to prove on the balance of probabilities, facts from which the tribunal could conclude, in the absence of adequate explanation, that the respondent has committed an unlawful act of discrimination. If the claimant does not prove such facts, then the claim will fail. c. It is unusual to find direct evidence of discrimination. d. It is important to note the use of the word “could” at s136(2) – that, at this stage of analysis, a definitive determination does not have to be made. e. The Tribunal needs to decide what inferences of secondary facts can be made from the primary facts at this stage, on the assumption there is no adequate explanation for those facts? f. Where the claimant has proven facts from which the Tribunal could conclude that the respondent has treated claimant less favourably on the grounds of (in this case) the claimant’s race then the respondent must prove that it did not do so. It must pro9ve that the treatment of the claimant was in no sense whatsoever on the grounds of the claimant’s race. g. The tribunal will need to assess (1) whether the respondent has provided an explanation for the relevant facts and (2) that the explanation is adequate to discharge the burden of proof on a balance of probabilities. h. The facts necessary to discharge the burden of proof would normally be in the possession of the respondent and a tribunal would therefore normally expect cogent evidence to discharge that burden of proof. 135. There can be occasions, particularly where a claimant is relying on a hypothetical comparator (as here) where it is appropriate to dispense with the first stage of the burden of proof test and to focus on the second stage, the reason why the Respondent treated the claimant in the way that it did. See for example the EAT Judgment in Laing v. Manchester City Council [2006] IRLR 748 (paragraphs 73 to 77). However, we also note the EAT’s caution against Tribunals adopting this approach too readily - in the recent case of Field v. Steve Pye and Co (KL) Limited [2022] EAT 68 and particularly paragraphs 43-46. 136. Finally, on the issue of burden of proof, we are mindful of guidance from case law indicating that something more than less favourable treatment may be required in order to establish a prima facie case of discrimination; see for example Madarassy v. Nomura International [2007 ICR 867] where the following was noted in the judgment: “The bare facts of a difference in status and a difference in treatment only indicate a possibility of discrimination. They are not, without more, sufficient material from which a tribunal “could conclude” that, on the balance of probabilities, the respondent had committed an unlawful act of discrimination.” Discussions and conclusions 137. We note below our conclusion against each of the factual allegations, applying the decision-making process that statute and case law requires and in accordance with RESERVED JUDGMENT Case No. 2423925/2017 29 those questions asked in the list of complaints and issues in paragraphs 2 and 3 of that list (depending on whether pregnancy discrimination, sex discrimination or both). 138. Before we set out our conclusions to the many and various complaints, we note some points applicable generally: a. Generally, Employment Tribunals consider and decide complaints made by employees against their employer; where there is something of an unequal bargaining relationship. In this case however, both parties had equal positions within EE. We agree with Ms Levene’s submissions that this case arises from a commercial dispute. The parties decided that they should go their separate ways from a business. There was a dispute about how that should happen. There was no mechanism within documents such as EE’s articles of association or a shareholder agreement, to assist in resolving a dispute, or to avoid a dispute where one or both business partners decided that the business partnership should come to an end. b. After the claimant gave birth in February 2017, she suffered from depression. In some of the complaints (issue 9 for example) the claimant alleges that the respondent treated her less favourably or unfavourably because she was ill. That is not our finding. The respondent’s actions arose from the claimant’s statements and behaviour including (and particularly) her statement that she wanted to end the business relationship between them, a statement that was reinforced by the claimant’s husband. Whilst the claimant’s illness might have affected some of her actions, it was not the reason the respondent acted as she did. It did not in any material way, influence the respondent’s actions. c. In each of the complaints (other than the last) the claimant alleges direct discrimination (protected characteristic sex) and pregnancy/maternity discrimination under section 18 EQA even though various of the complaints occur after the protected period. We find that the claimant did not have the protection of section 18 following her return from maternity leave. We have also considered the terms of section 18(5) EQA, and we are satisfied that the respondent did not reach a decision, during the claimant’s maternity leave, that the 2 of them needed to go their separate ways. It is clear to us that this was the claimant’s stated proposal, not the respondent’s. d. We have decided to treat the fact of the claimant’s pregnancy, as enough of an indication that the respondent’s treatment of the claimant during and after her pregnancy could have been less favourable treatment because of the claimant’s sex or unfavourable treatment because of pregnancy. As such we have looked for an explanation for the respondent’s behaviour in respect of each and every complaint. The explanations (and our conclusions) are the same for a number of them, particularly those under issue 11; but in reaching these conclusions we have considered individually each and every complaint. RESERVED JUDGMENT Case No. 2423925/2017 30 139. We note next our decision about time limits (issue 4). We have decided that it is just and equitable to reach decisions about all allegations including those that may be out of time. In reaching this decision we took into account:- a. That we had heard the evidence about all the issues and so were in a position to reach a decision b. That, had the claimant been successful with some or all the complaints, we may well have concluded that there had been conduct extending over a period for the purposes of section 123(3) EQA c. That the matters in dispute arose during the claimant’s pregnancy and shortly thereafter. As a Tribunal we are well aware of the potential for pregnancy/maternity discrimination and a strict application of the 3-month time limit at a stage when a claimant was an expectant and new mother ( including periods of time when an employee is not in the workplace) would often in our view lead to unjust outcomes. 140. We set out below the various complaints. Our responses cover not just our findings on the relevant facts but also (under each of the complaints) our conclusions under issues 2.2 to 2.7 and issues 3.2 and 3.3. Issue One On 29 August 2016, did the respondent amend the “Ways of Working” document by adding “use contraception in the future”; 141. She did. See paragraph 32-34 above. What is also clear from our findings is that we do not consider that comment to have been unfavourable or less favourable treatment of the claimant. Issue 2. Between November 2016 and January 2017 did the respondent request and/or orchestrate a structure of the company which had the effect of reducing the claimant’s remuneration, to the substantial disadvantage of the claimant? In doing so, was the claimant was misled and manipulated. 142. See our findings at paragraphs 22 to 28 above. We are satisfied that the amended remuneration arrangements are as a result of a commercial negotiation and agreement between 2 business partners. The claimant was not misled or manipulated. 143. In so far as the proposal to alter remuneration arrangements amounted to unfavourable treatment of the claimant at all, the claimant’s pregnancy was irrelevant to the respondent’s decision to raise the prospect of renegotiation, prior to the parties agreement. 144. As for the allegation of less favourable treatment, we are satisfied that the claimant’s gender played no part in the respondent’s actions. The respondent would have made the same proposal to change the remuneration/profit share structure of EE to a hypothetical male comparator in circumstances that were materially the same. Issue 3. In January 2017, did the respondent offer the claimant an enhanced maternity package and then requested that it be withdrawn? RESERVED JUDGMENT Case No. 2423925/2017 31 145. This is a reference to an initial proposal in discussions between the parties about changing the remuneration structure, that income be split on a 95%/5% basis. The parties did not proceed with that option because they agreed another option. It was not put as an enhanced maternity package but as a profit-sharing model going forwards (not just during maternity leave). In so far as it amounted to unfavourable treatment of the claimant, the claimant’s pregnancy was irrelevant to the respondent’s decision to propose an alternative arrangement and the claimant’s agreement to that alternative arrangement. See our findings at paras 35-39. These findings also record that the respondent offered the claimant the 95/5% split but the claimant agreed instead to the arrangement that was then put in place. In so far as it amounted to less favourable treatment, the claimant’s gender was irrelevant. A hypothetical male comparator would have been treated in the same way. Issue 4. In July 2017, did the respondent fail to offer any support and/or to enquire about/even mention the claimant’s health when or at any time after, she was informed the claimant had post-natal depression? 146. This is a reference to the weeks following a telephone call between the respondent and the claimant’s husband during which the claimant’s husband spoke openly about his concerns for the claimant. See our findings at paras 49-51 above. We accept the respondent’s explanation as to why she did not mention what had been said to her in that call. We do not regard that as less favourable treatment. 147. It is also apparent from our findings that the respondent was not unsupportive or disinterested in the claimant’s health and wellbeing in July 2017. At this stage the parties remained personal friends as well as business partners. As such the respondent did not treat the claimant less favourably than a hypothetical comparator would have been treated. 148. The respondent’s behaviour did not amount to unfavourable treatment of the claimant either, but in any event, section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 5. On 3 July 2017, did the respondent accuse the claimant of not wanting to grow the business since getting pregnant, of being disinterested in the business since becoming pregnant and use this as an excuse to force the claimant out of the business? 149. Relevant findings of fact are at paras 43-48 above. We have no criticism of the respondent’s conduct on 3 July 2017. Comments about problems in the business relationship between the 2 came from the claimant, not the respondent. The claimant ( not the respondent) stated her intention to end their business relationship. 150. We also note that there were no comments using words along the lines in this complaint that were sent by the respondent during the message exchange between the parties at the beginning of July. 151. We are satisfied that the claimant’s sex was irrelevant to the respondent’s actions/ comment made on 3 July 2017. She would have started to have the same concerns had a hypothetical male comparator, in business with the respondent, expressed similar concerns about the business and their partnership. RESERVED JUDGMENT Case No. 2423925/2017 32 152. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 6. On 20 July 2017, did the respondent send hostile messages to the claimant which accused the claimant of not doing much work, apply pressure on the claimant to leave the business and indicate that she wanted the claimant to leave, stating that the claimant needed to resign before she took on any other work and also stating that she was not prepared to “carry on like this? 153. Relevant findings are at paragraphs 52 to 60. We do not find that any hostile messages were sent. In so far as the respondent sent messages asking what the claimant was going to do, from a professional perspective; these were prompted by the claimant’s own indications that she wanted to leave EE. In so far as the respondent indicated a preference that the claimant resign her directorship with EE, this was prompted by the claimant’s indication that she would engage in work with competitive firms. 154. We are satisfied that the respondent would have applied the same treatment to a hypothetical male comparator who had also indicated an intention to leave and an intention to seek associate work with competitor firms. 155. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 7. On 2 August 2017, did the respondent state in a meeting with the claimant that when the claimant fell pregnant she thought “well I just need to go off” which was again a clear indication that the respondent meant to side-line the claimant and orchestrated a restructure of the business to facilitate this? 156. The respondent did not state this. See our findings at paragraph 61 to 65. Issue 8. On 22 August 2017, did the respondent made extremely hurtful and unfounded accusations that the claimant’s pregnancy-related illness was the fault of the claimant’s husband? 157. In her submissions Ms Levene noted this was an allegation that the respondent treated the claimant’s husband in an unfavourable or less favourable way and as such it cannot proceed as an allegation by the claimant that the respondent subjected her to unlawful treatment under the Equality Act 2010. We agree. 158. Further, the comments that the respondent did make to the claimant’s husband were not made because of the claimant’s sex. They were made because the claimant herself had indicated that there was some pressure from her husband for her return to work and because the respondent understood the claimant’s husband was apportioning some responsibility for the claimant’s poor health on the respondent. Her comments were perhaps a little unkind; but they did not amount to direct discrimination. 159. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 9. On 24 August 2017, did the respondent pressure the claimant to sell her shares for an extremely low price despite the claimant suffering from post-natal depression (a pregnancy-related illness) and specifically requesting time and space to deal with the same? RESERVED JUDGMENT Case No. 2423925/2017 33 160. No. This is clear from our findings of fact (almost entirely documented) about the protracted but ultimately unsuccessful share sale negotiation. We also note that the claimant had instructed solicitors at a later stage in these negotiations and, even with their professional advice and assistance, the negotiations (this time for the claimant to buy the respondent’s shares) were based on the same value that the claimant complains she was being pressurised to sell. 161. The respondent did place some pressure on the claimant to enter a transaction. But that pressure was applied because of a desire for finality; a resolution. It was not because of the claimant’s gender. It was applied at a time that the claimant had recently returned to work from a maternity related illness but it was not applied because the claimant had a pregnancy related illness. 162. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 10. Between August and September 2017, did the respondent refuse to authorise the company accountant to apply for advance funding from HMRC and withheld pre-agreed salary from the claimant, following the claimant’s second period of pregnancy-related absence due to post-natal depression? 163. No. It was the respondent who proposed an application for advance funding from HMRC to cover a further payment of maternity pay (see para 81(a) above). There is no evidence that the respondent refused to authorise such an application. 164. In so far as the allegation is that the respondent refused to authorise payments from EE’s funds, we are satisfied that this was because there were no funds available from the claimant’s profit share and that the expectation at the time was that the company may be dissolved in the near future (and well before any repayment from HMRC would have been made). The claimant’s sex was irrelevant to the respondent’s actions. We also note a. that the claimant herself proposed the same approach to funding a further tranche of maternity pay as had been applied during the claimant’s maternity leave (see para 83 above). b. that ultimately this application was made to HMRC for direct funding and that it was paid ( we have seen this in the bundle of documents at page 1310). 165. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 11. General conclusions – relevant to each complaint under issue 11. 166. We have considered the respondent’s explanations in relation to each allegation under 11 and comment below. However, we have reached conclusions relevant to all allegations about the respondent’s conduct between August and October 167. There was by this stage a dispute between claimant and respondent. This dispute arose particularly following the claimant’s proposal made on 9 August 2017, that the RESERVED JUDGMENT Case No. 2423925/2017 34 respondent purchase the claimant’s shareholding for £35,000. From that stage relations between the 2 were unfriendly. Whilst the claimant’s husband hoped to be able to intervene to help resolve the dispute that had then begun, his intervention was unsuccessful and his proposal that EE be wound up “straightaway” made even clearer the need for finality. The respondent’s view was that the claimant did not help in achieving this, even though the request for it had come from the claimant and the respondent understandably needed an outcome so that she would be able to continue to progress with her business plans. 168. We also note the clear message from the claimant on 18 August 2017 that she wanted EE to be dissolved. Certainly, by then it was clear that the parties were to separate their business relationship. The respondent wanted to achieve that within a short time frame. The respondent’s wish to resolve matters quickly, probably added to the dispute that had by then begun. However, the claimant’s pregnancy or sex were irrelevant to the respondent wanting to achieve a quick outcome. The respondent was motivated by her wish to continue in business, to retain her client and contacts and to ensure that she alone would then benefit from the business that she generated ( not just in terms of immediate revenue but in terms of increasing the value of the business overall). 169. Sadly, and when an outcome was not quickly realised, the behaviour of both parties deteriorated. The dispute impacted the respondent’s behaviour; but the respondent’s behaviour between (and including) August and October 2017 was not because of the claimant’s sex; it was because the parties were in dispute. 170. During this period, the actions of one party led to the other party taking action. But that was in the nature of the dispute and deteriorating relationship between the 2 parties. It was not because of the claimant’s sex. 171. Having reached that conclusion, it is not for us, an Employment Tribunal to then pick through the various elements of the dispute and various behaviours of the parties and determine who is right and who is wrong. 172. Section 18 is not engaged in any of the complaints under issue 11. Issue 11.1. Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business, by threatening to defame the claimant and block the claimant from undertaking additional work? 173. The reference to “defame” is a reference to the claimant’s email dated 15 October 2017 (see para 104). The content of correspondence between the parties ( and between the claimant’s solicitors and respondent) had by this stage become confrontational on both sides. 174. The respondent made these threats because (1) she had been on the receiving end of correspondence from the claimant’s solicitors (2)she was in dispute with the claimant and she believed, in making these threats, she would improve her position in the dispute and negotiations. It was not because of (or in any way influenced by) the claimant’s sex. Had the respondent found herself in the same position with a hypothetical male comparator, she would have behaved in the same way. RESERVED JUDGMENT Case No. 2423925/2017 35 Issue 11.2. Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business by removing the claimant’s visibility from all business finance systems, so the claimant had no way of seeing monies coming into the business by removing her from all business systems and emails whilst she was off with post-natal depression and refusing to reinstate her access when she returned? 175. Our conclusion is the same as under issue 11.1 above. As is clear in our findings of fact, we are critical of each party’s actions in preventing the other party accessing various accounts. However, this behaviour was part of ( and a consequence of) the dispute between the parties. It was not because of (or in any way influenced by) the claimant’s sex. Had the respondent found herself in the same position with a hypothetical male comparator, she would have behaved in the same way. Issue 11.3. Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business by removing the claimant’s access to the invoicing system, transferring the company’s money into her personal account, making a demand from the claimant for alleged overpayments, accusing the claimant of fraud and making numerous false allegations against her? 176. Our conclusion is the same as under issue 11.1 and 11.2 above. Issue 11.4 Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business by removing the claimant from the company bank account by falsely declaring to the bank that the claimant was no longer a part of the business and did not disclose that she had done this to the claimant? 177. Our conclusion is the same as under issue 11.1 and 11.2 above. We also note our findings of fact about the claimant being removed from EE’s bank account. The respondent acted in this way because the claimant had frozen the account and the respondent was unable to use it. The claimant had taken that action because the respondent had transferred substantial funds. This action was part of an escalating dispute which had reached an unedifying stage at which one party took some action and the other party reacted in a confrontational manner. The claimant’s gender was irrelevant. The respondent would have acted in the same way towards a hypothetical male comparator in materially similar circumstances. Issue 11.5. Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business by, on 3 October 2017, making false declarations that one of the business’ main clients were no longer working with them as a way of preventing the claimant being paid the money she was due? 178. See our findings of fact at para 100 above. 179. We conclude that there are 2 explanations for the respondent’s comments about the particular client :- a. That they are true b. That they are not true but the respondent sought to put herself at an advantage in the dispute and negotiations between the parties. 180. The claimant’s sex is not relevant to either explanation. We are satisfied that the respondent did not treat the claimant less favourably than she would have treated a RESERVED JUDGMENT Case No. 2423925/2017 36 hypothetical male comparator in substantially the same circumstances. She did not treat the claimant less favourably because of her sex. Issue 11.6. Between August and October 2017, did the respondent place significant pressure on the claimant to leave the business by pressurising the claimant to resign or she state that she would damage her reputation? 181. This complaint is covered by 11.1 above. Issue 12. In September 2017, did the respondent disclose the claimant’s personal medical information relating to a pregnancy-related illness to a client of the business? 182. No. See our findings at 112-117 above. Issue 13. Between July and October 2017, was the claimant denied SMP payments as the respondent refused to authorise the accountant to request the SMP payment from HMRC on behalf of the claimant? 183. No. See our conclusions under issue 10 above. 184. Section 18 is not engaged as the facts relevant to this complaint fall outside of the protected period. Issue 14. In November 2017, did the respondent refuse to allow the claimant to purchase her shares despite already agreeing to a new price? 185. The claimant failed to meet the deadline set by the respondent (30 October 2017) and the parties were unable to agree terms. Those are the reasons that the claimant did not buy the respondent’s shareholding. The claimant’s sex was irrelevant. Employment Judge Leach Date: 18 May 2023 RESERVED JUDGMENT AND REASONS SENT TO THE PARTIES ON 26 May 2023 FOR THE TRIBUNAL OFFICE Public access to employment tribunal decisions Judgments and reasons for the judgments are published, in full, online at www.gov.uk/employment-tribunal-decisions shortly after a copy has been sent to the claimant(s) and respondent(s) in a case.